Overview
TD Ameritrade (TDA) and Interactive Brokers both get interest from professional-level traders. They both have sophisticated trading technology that offers
active traders a lot of advanced features. But they also have significant differences. This article will compare and contrast the two and see where
their strengths and weaknesses lie.
Services
| Broker Review |
Cost |
Investment Products |
Trading Tools |
Customer Service |
Research |
Overall Rating |
|
TD Ameritrade
|
|
|
|
|
|
|
|
IB
|
|
|
|
|
|
|
Commissions and Fees
| Broker Fees |
Stock/ETF
Commission |
Mutual Fund
Commission |
Options
Commission |
Maintenance
Fee |
Annual IRA
Fee |
|
TD Ameritrade
|
$0
|
$49.95
|
$0 + $0.65 per contract
|
$0
|
$0
|
|
IB
|
$1+
|
$14.95
|
$0.25+ per contract
|
$0-$240**
|
$30
|
In addition to trade commissions, IBKR Pro customers must pay at least $10 per month, either in total
commissions or as a monthly account fee. The fee increases to $20 per month for accounts with less than $2,000
in assets. IBKR Lite clients don't have this fee and commissions. TD Ameritrade, on the other hand, has no
inactivity fees.
This category is a tie.
Promotion Links
Thinkorswim: $0 commissions + get up to $600.
Interactive Brokers: Open account and get $200 for a friend you refer.
Range of Tradable Instruments
TD Ameritrade usually outperforms its rivals in this category. In addition to stocks, bonds, options, and funds, the broker-dealer also offers forex and futures, which most firms don’t provide. In this comparison, however, TDA underperforms. Interactive Brokers provides all of the products just mentioned, plus options on futures, structured products, warrants, and access to a wide swath of global securities.
For international investors, IB provides access to nearly 30 countries. This translates into over 20 currencies and 120 markets. TD Ameritrade does not have this global emphasis, which is definitely a weak point compared to its rival here.
Funds
Mutual and exchange-traded funds are available at both firms. At TD Ameritrade and IB Lite ALL stocks and ETF’s can be
traded with zero commissions. TD Ameritrade seems to have better resources for fund traders. We liked TDA’s
ETF screener better, and we thought the ETF center on the broker’s website was very helpful.
As for mutual funds, both brokerage houses have large selections of funds and resources. Interactive Brokers
has fewer than 11,000 total funds. Less than 4,200 are no-transaction-fee products, and some of these are load
funds, while others are no-load products.
At TD Ameritrade, we counted slightly more than 13,000 funds, with about 4,200 NTF funds.
While the numbers are similar, we thought TD Ameritrade did a better job of providing mutual fund resources,
including a great mutual fund center on its website.
Every mutual fund has an extensive profile page at TD Ameritrade, and here it’s possible to find all sorts of
vital information, such as portfolio composition, Morningstar risk and return ratings, manager information,
sector breakdown, and a growth chart of $10,000.
It’s also possible to trade mutual funds on one of TD Ameritrade’s mobile apps. IB offers this trading service
on its mobile platform, although we thought TD Ameritrade’s system was more user-friendly. Overall, we like
TD Ameritrade better in this category.
Portfolio Management
Besides self-directed accounts, both brokerage firms have portfolio management services of some kind or another. IB has affiliated investment advisors who use IB’s platform, although it’s not possible to hire these investment professionals directly through Interactive Brokers. These financial advisors typically offer traditional management services. We don’t know of any party that offers a robo-advisory service.
TD Ameritrade, on the other hand, offers managed accounts directly through itself (technically, they are through its affiliate TD Ameritrade Investment Management, LLC, but it’s possible to sign up through TD Ameritrade). In addition to several traditionally-managed options, a robo-advisory service is on tap. It trades low-cost ETF’s, costs just 30 basis points annually, and requires a low $5,000 to start. If you demand more than exchange-traded funds, the broker’s human-managed accounts can bring in other asset classes, although the fees and minimums are higher.
Overall, TD Ameritrade is a much better pick in this category.
Trading Tools
Because Interactive Brokers caters to professional and advanced traders, the company has a robust desktop platform and an equally-impressive mobile
app. Charting is very sophisticated with drawing tools, technical indicators, and right-click trading. The feature we really liked on
Trader Workstation, the company’s desktop software, was the ability to
access global financial markets and trade instruments on foreign exchanges.
TD Ameritrade has seen IB’s software and matched it. Actually, TDA has gone much further than IB in this category. Its
desktop software thinkorswim has 400 technical studies, which far surpasses the 100 that are available on TWS. TD Ameritrade has three mobile apps (IB has just one), and a live broadcast of CNBC is available on two of them. IB does not offer the service.
If you prefer to trade on a website, TD Ameritrade has a nice browser-based platform called Trade Architect. The software offers technical studies (fewer than thinkorswim), account management, and financial video news. There’s a trade bar on the TDA website that allows for quick trading of stocks, ETF’s, and options. The website would probably be enough for most investors.
Besides trading platforms, TD Ameritrade and Interactive Brokers also offer skills for Amazon Echo and Echo Show. They are able to provide market and security data simply by asking a question such as, “Alexa, where is the S&P 500 at today?” Both Interactive Brokers and TD Ameritrade have apps for Apple Watch.
Overall, TD Ameritrade seems to have the edge here.
Retirement Accounts
Individual Retirement Accounts are available at both broker-dealers. At TD Ameritrade we found Roth, Traditional, SEP, and SIMPLE accounts. The brokerage firm also provides self-employed 401(k) plans. None of these accounts have any fees, a nice plus.
At Interactive Brokers, we found only Roth, Traditional, and SEP accounts. We did not find solo 401(k)’s or a SEP IRA. Both brokers can transfer an old employer’s pension plan into an IRA.
Investment Education
In the realm of retirement education, TD Ameritrade offers more resources. The educational materials Interactive Brokers provides are mostly geared towards active trading, not long-term saving. These resources are pretty good though; for example, a self-guided course takes users through the differences between fundamental and technical analysis. This is in video format. Besides videos and webinars, there’s also an investment glossary on the IB site.
Despite IB’s strengths here, we actually prefer TD Ameritrade due to the latter broker’s extensive collection of educational materials. The TDA site has a large selection of articles, webinars, and videos on a wide variety of topics. Besides investing, some of the materials cover personal finance.
Promotions
Thinkorswim: $0 commissions + get up to $600.
Interactive Brokers: Open account and get $200 for a friend you refer.
TD Ameritrade vs IBKR Recap
Both brokerage firms in our survey offer a lot of investment resources to their clients. Each one has its own
unique strengths and weaknesses. If you plan to invest in global securities, go with Interactive Brokers. If
you’re a beginner, funds investor, or long term investor we recommend TD Ameritrade. If you are a trader, you
should have account at both firms.
|