The days of calling your stock broker to make a trade — and pay 50 bucks for the privilege — are long gone. Today, everything’s online and, particularly with stocks, usually commission-free. However, you still have to sort through features, fees, minimum balance requirements and other factors to find the best brokerage account for you.
Lorem ipsum
Our top selections for the best brokerage accounts have something for everyone, from beginners to more experienced investors.
We receive compensation from our partners for Featured Offer placements, which impacts how and where their offer is displayed.
Featured Offer
Datalign Advisory
Match with a pre-screened financial advisor that is right for you.
Answer 20 questions and get matched today. Connect with your match for a free, no-obligation call.
Methodology
To determine the best brokerage accounts, our editorial team started with 24 firms, including both traditional brokerages, usually with brick-and-mortar locations, and investment platforms from fintech (financial technology) companies. From there, we evaluated each company based on 12 main factors, with a focus on available investments, obstacles to entry and fee structures.
Below, view our complete methodology that explains how we arrived at our list of best brokerage accounts.
If you’re curious how our team ranked the best investment apps from fintech firms and primarily online brokerages, click here to read our full breakdown.
Show summary
-
Fidelity Investments
: Best brokerage account overall
-
Merrill Edge
: Best for Bank of America customers
-
Charles Schwab
: Best for low fees and access to physical locations
-
Vanguard
: Best for direct access to industry-leading, low-cost index funds and ETFs
-
E*TRADE
: Best for access to comprehensive investing, research and banking services
-
Interactive Brokers
: Best for intermediate and advanced traders and investors
-
Webull
: Best for options traders who want a competitive interest rate on uninvested cash
-
SoFi
: Best for investors who want a one-stop shop for all their money needs
-
Ally Invest
: Best for DIY investors looking for a straightforward self-directed option
-
Firstrade
: Best for options traders
Fidelity Investments
Best brokerage account overall
Commissions & fees
$0 stock & ETF commissions/$0.65 per option contract
Accepts payment for order flow
No
Automated investing option
Yes
5/5
Why we picked it
Fidelity stands out as an excellent choice for a wide range of individuals, particularly beginners and long-term investors. As with all of the names on our list, you’ll pay a fee to make trades via a live broker. However, if you keep your activity online, Fidelity provides easy-to-use online and mobile app interfaces alongside one of the best fee structures in the business.
Lorem ipsum
While other firms on our list charge what has become a near-industry standard $0 commission on stock, exchange-traded fund (ETF) and options trades (the $0.65 per options contract fee notwithstanding), Fidelity manages ETFs and, particularly, mutual funds with some of the lowest expense ratios in the industry, even when compared to Vanguard. For example, through a Fidelity brokerage account, you’ll have access to Fidelity’s suite of zero-expense-ratio, index-tracking mutual funds.
Lorem ipsum
Fidelity also offers cryptocurrency investing via Fidelity Crypto (available in most states) and fractional shares, a feature that allows small investors to purchase shares of more than 7,000 domestic stocks and ETFs with as little as $1.
Lorem ipsum
Fidelity maintains its $0 commission structure while not paying for order flow, a controversial practice where the brokerage receives compensation to route orders to specific market makers (middlemen). Instead, Fidelity routes orders to the market center where it can secure the best price on your trade. The firm says this practice “can save investors $12.97 on average for a 1,000-share equity order” and saved its clients more than $816 million in 2023. While most of the names on our list do accept payment for order flow, Vanguard and Merrill Edge do not, with Merrill reporting that it saved investors, on average, $16.80 per 1,000 shares, during the third quarter of 2023.
Lorem ipsum
Fidelity’s low fees don’t stop with trades and long-term investment vehicles. In addition to no minimum required to open an account, Fidelity, unlike some competitors, does not charge an annual account service fee and charges nothing for most account-related services. Additionally, Fidelity’s brokerage platform includes straightforward research tools, including quotes, alerts, watchlists, news and analysis, alongside 24/7 live customer service that provides the option of sharing your screen so an agent can better assist you.
Lorem ipsum
Fidelity brokerage customers also benefit from a 4.95% yield, as of May 2024, on uninvested cash with no minimum balance via an automatic sweep into a Fidelity money market fund.
Pros
- Low fee structure across the board
- Intuitive online and mobile interfaces
- Efficient, 24/7 live customer service
Cons
- $0.65 option contract fee
Who should use it?
Long-term and beginning investors who want low fees across a comprehensive slate of investment options and services should consider Fidelity Investments.
Merrill Edge
Best for Bank of America customers
Commissions & fees
$0 stock & ETF commissions/$0.65 per option contract
Accepts payment for order flow
No
Automated investing option
Yes
4.7/5
Why we picked it
Merrill Edge’s brokerage service benefits from its relationship with parent company, Bank of America. If you’re an existing BofA customer and want a (relatively) no-frills brokerage account, Merrill Edge Self-Directed can make sense for you.
Lorem ipsum
The only big bank-affiliated name on our list, Merrill Edge customers have widespread access to branches across the nation for in-person service. With a balance of $20,000 or more, you can get one-on-one financial advisory with Merrill Edge at many BofA branches.
Lorem ipsum
As for the platform itself, the BofA integration extends to Merrill’s brokerage clients having access to BofA’s robust market research. While you can access Merrill Edge Self-Directed online or via an app, the features are relatively limited, particularly when compared to pure investment firms like Schwab and Fidelity. That said, Merrill’s Idea Builder interface is unique in that it uses BofA data to help brokerage clients find investments related to themes, such as health, or social considerations, including climate change.
Lorem ipsum
Clients enjoy zero commissions across the major asset categories, but Merrill Edge lands close to the middle among the names on our best brokerage accounts list at $29.95 per broker-assisted trade.
Pros
- Industry-standard fee structure
- Solid integration with Bank of America banking and investment research services
Cons
- Access to cryptocurrency limited to ETFs
- No fractional shares
Who should use it?
Merrill Edge can make sense for investors who have an existing relationship with Bank of America.
Charles Schwab
Best for low fees and access to physical locations
Commissions & fees
$0 stock & ETF commissions/$0.65 per option contract
Accepts payment for order flow
Yes
Automated investing option
Yes
4.3/5
Why we picked it
In terms of its overall platform and fee structure, Schwab runs neck and neck with Fidelity. If you’d like to buy or sell securities trading on a US exchange over the phone, Schwab charges $5 for automated phone support and $25 per trade for live assistance, which is lower than Fidelity’s $12.95 and $32.95 fees for the same services.
Lorem ipsum
Schwab offers fractional shares, but the feature requires a $5 minimum investment “per slice” and is limited only to . While Schwab is competitive on the expense ratios it charges for its own ETFs and mutual funds, particularly compared to select Vanguard index ETFs, it does not offer zero-expense-ratio options like Fidelity.
Lorem ipsum
Schwab’s research platform stands out, thanks in part to a clean interface for placing orders and excellent stock and ETF screeners that provide seamless links to buying and selling names from filtered results or a customizable watchlist. One downside: Some of Schwab’s research capability is lacking or absent in its mobile app, with better accessibility and usability in its desktop and software-based environments.
Lorem ipsum
Like Fidelity, Schwab offers 24/7 live telephone customer service and a screen-sharing feature. In our testing, both firms answered our calls quickly (in less than five minutes) during market and non-market hours.
Lorem ipsum
Also of note, Schwab recently purchased TD Ameritrade, subsequently integrating TD’s popular thinkorswim trading platform into its brokerage services.
Pros
- Low fee structure and competitive expense ratios
- Quick, 24/7 live customer service
- More than 300 brick-and-mortar branches nationwide
Cons
- Does not offer spot cryptocurrency trading
- No zero-expense-ratio funds or ETFs
Who should use it?
Long-term investors who seek low fees and access to brick-and-mortar locations should consider Charles Schwab.
Vanguard
Best for direct access to industry-leading, low-cost index funds and ETFs
Commissions & fees
$0 stock & ETF commissions/$1 per option contract
Accepts payment for order flow
No
Automated investing option
Yes
4.2/5
Why we picked it
Vanguard is known as the pioneer in low-cost index investing. This helps make its brokerage service a good option for long-term, buy-and-hold investors.
Lorem ipsum
Other than its slightly higher, $1 per option contract fee, Vanguard’s commission and fee structure is in line with its competitors. To purchase stocks and ETFs over the phone, Vanguard charges a $25 per trade commission if you have less than $1 million in assets with the firm.
Lorem ipsum
In terms of expense ratios, outside of Fidelity’s attractive zero-expense-ratio mutual funds, Vanguard is the clear winner. Across mutual funds and ETFs, Vanguard’s average expense ratio was just 0.08% at the end of 2023. According to the firm, that’s 82% lower than the 0.44% average of all its competitors combined. If you want low-cost Vanguard ETFs, it can make sense to hold them inside a low-cost Vanguard brokerage account. While Vanguard does charge a $25 annual account service fee, it’s pretty easy to avoid. All you have to do is sign up for electronic delivery of statements and other documents. Or you can do it the hard way and meet the lofty threshold of having at least five million bucks in Vanguard accounts.
Lorem ipsum
That said, Vanguard isn’t known as much for its brokerage as its funds. Its research and trading platforms lack when put up against the other names on our list. Additionally, calling it “more of a speculation than an investment,” Vanguard does not offer any cryptocurrency products. Unlike many of our other best brokerages for 2024, Vanguard’s live customer service has limited operating hours of 8 a.m. to 8 p.m. Eastern, Monday through Friday.
Lorem ipsum
As of May 2024, the default settlement fund for uninvested cash, the Vanguard Federal Money Market Fund (VMFXX), yields 5.27%. However, you can also link Vanguard’s cash management account with a Vanguard brokerage account and earn a 4.6% APY on uninvested cash, with Federal Deposit Insurance Corp. (FDIC) insurance.
Pros
- Easy access to low-cost Vanguard funds
- Competitive fee structure
Cons
- Limited customer service hours
- Less-than-robust trading and research platforms
- Only offers fractional share investing in Vanguard ETFs
Who should use it?
Investors who favor and want direct access to Vanguard’s industry-leading, low-cost index ETFs should consider the firm’s brokerage account.
E*TRADE
Best for access to comprehensive investing, research and banking services
Commissions & fees
$0 stock & ETF commissions/$0.65 per option contract
Accepts payment for order flow
Yes
Automated investing option
Yes
4/5
Why we picked it
In late 2020, legacy investment firm Morgan Stanley purchased E*TRADE. This gives new E*TRADE customers access to Morgan Stanley’s well-regarded investment research, financial advisors, brick-and-mortar locations and comprehensive suite of banking and credit services via Morgan Stanley Private Bank.
Lorem ipsum
While Morgan Stanley owns and manages its own specialized ETFs geared towards advanced investors, neither it nor E*TRADE offers the broad range of index funds and ETFs Fidelity, Schwab and, especially, Vanguard are known for. However, if a direct relationship with the fund family isn’t important to you, you can buy any US-listed ETF via E*TRADE commission-free. The same applies to US-listed stocks, mutual funds and options. While options trades incur a standard $0.65 per contract fee, E*TRADE lowers that charge to $0.50 per contract for clients who make a minimum of 30 stock, ETF or options trades each quarter.
Lorem ipsum
As of May 2024, E*TRADE pays relatively meager APYs on uninvested cash for most account holders, ranging from 0.01% on balances up to $500,000 to 0.15% for a $1 million or more.
Lorem ipsum
E*TRADE has one of the best education centers of all the brokerages we reviewed. In addition to Morgan Stanley’s proprietary research, E*TRADE customers have access to a wide range of basic educational material as well as the firm’s Core Portfolios automated investing service. That said, E*TRADE does not offer fractional share stock purchases, limiting the feature to ETFs and mutual funds within Automatic Investing accounts with a minimum of, $25.
Lorem ipsum
As of May 2024, E*TRADE does not offer trading in individual cryptocurrencies, touting instead the ability to gain indirect exposure to crypto via stocks, futures and ETFs.
Pros
- Research and banking arms bolstered by Morgan Stanley
- Low fee structure
Cons
- Does not offer direct access to cryptocurrency
- Does not offer fractional share stock purchases
Who should use it?
E*TRADE can make sense for all levels of investors who want access to a full slate of investing, banking and research services.
Interactive Brokers
Best for intermediate and advanced traders and investors
Commissions & fees
$0-$0.005 stock & ETF commissions/$0.15-$0.65 per option contract
Accepts payment for order flow
Yes (IBKR Lite only)
Automated investing option
Yes
3.9/5
Why we picked it
Of all the brokerages we reviewed, Interactive Brokers’ comprehensiveness can be a blessing and a curse. It just depends on your needs and experience level as an investor.
Lorem ipsum
While Interactive Brokers stands out for investment selection, the power and utility of its ecosystem and, importantly, its super-low commission and fee structure, everything from its marketing to the look and feel of its platforms can be confusing, if not intimidating, particularly for individuals new to investing. So, it’s no surprise that IB is a top choice of professional investors, including financial advisors and hedge fund managers.
Lorem ipsum
Investors have a choice between two versions of IB’s platform: IBKR Lite and IBKR Pro. With IBKR Lite, you pay no commissions on stock and ETF trades. If that’s all you trade, IBKR Lite will get the job done. However, it might make more sense for active options and futures traders, and those who trade on margin, to go with IBKR Pro. Both versions have no minimum balance requirement.
Lorem ipsum
With Interactive Brokers, you can trade all the major asset classes, including cryptocurrency. On uninvested cash balances over $10,000, Lite users receive a 3.83% interest rate, while Pro clients do a percentage point better at 4.83%, as of May 2024.
Lorem ipsum
That said, while geared in some areas to traders rather than investors, Interactive Brokers’s educational offerings, via IBKR Campus, are second to none. They include news, analysis, podcasts and webinars.
Pros
- Professional-level platforms
- Wide investment selection
Cons
- Marketing and actual platforms might be intimidating for new investors
- Relatively large balance required to earn interest on uninvested cash
Who should use it?
Intermediate to advanced investors will benefit most from Interactive Brokers’s wide-ranging and sophisticated platform.
Webull
Best for options traders who want a competitive interest rate on uninvested cash
Commissions & fees
$0 stock & ETF commissions/$0 per option contract
Accepts payment for order flow
Yes
Automated investing option
Yes
3.7/5
Why we picked it
Webull and SoFi have a fair bit in common, which is part of why they ended up back-to-back on our ranking of the best brokerages for 2024. While Webull isn’t as much of a one-stop shop as SoFi, it does offer cash management tools and zero commissions and fees on most stock, ETF and options trades.
Lorem ipsum
While there’s no assignment or exercise fee, Webull, like all brokerages, does charge per-contract regulatory fees of a few cents on all options trades. It also levies a $0.55 per contract fee to trade most index options. Intermediate to advanced options traders will appreciate these low fees as well as Webull’s robust options education, real-time options quotes and 11 different options strategies to choose from.
Lorem ipsum
Like SoFi, Webull offers fractional shares investing on a wide assortment of stocks and ETFs with a minimum investment of $5. Webull also offers paper trading for investors who want to practice or simulate trading and investing without putting real money on the line.
Lorem ipsum
As of May 2024, Webull pays an impressive 5% APY on uninvested cash in its no-fee cash management account. Webull’s robo-advisor requires a $100 minimum investment and incurs a 0.2% monthly fee after an initial six-month grace period.
Pros
- Low fee structure
- Solid all-around choice for active options traders
Cons
- Platform might be too advanced for beginners
- Does not provide one-on-one financial advisory
Who should use it?
Investors who desire advanced features, particularly on options trading, should consider Webull.
SoFi
Best for investors who want a one-stop shop for all their money needs
Commissions & fees
$0 stock & ETF commissions/$0 per option contract
Accepts payment for order flow
Yes
Automated investing option
Yes
3.6/5
Why we picked it
SoFi is a one-stop shop for pretty much all of your personal finance and investing needs. So, it’s no surprise that SoFi targets much of its marketing to younger investors. According to consulting firm McKinsey & Co., more than 73% of wealth management clients between the ages of 25 and 44 with less than $1 million in investable assets prefer to consolidate their investing and banking activities, up 60% between 2018 and 2023.
Lorem ipsum
It might be a one-stop shop, but SoFi is not a one-trick pony. Separate from its banking and credit services, SoFi’s investing arm passes muster. Among all of the names on our best brokerage accounts list, SoFi is among the best on fees. SoFi charges zero commission or fees on almost all stock, ETF and options trades. With options, you’ll pay a $5 exercise/assignment charge and get dinged for just a few cents per contract thanks to the fees charged by regulators.
Lorem ipsum
While SoFi doesn’t pay interest on uninvested cash in brokerage accounts, you can earn competitive rates in SoFi savings and checking accounts.
Lorem ipsum
SoFi offers no-commission fractional share investing on more than 4,000 stocks and ETFs with a minimum investment of just $5. And, maybe most impressively, all SoFi members have free access to professional financial advisors who do not sell products and must act and provide advice in line with your best interests. And, with just $1, you can automate your investing via SoFi’s no-fee robo-advisory service.
Pros
- Low fee structure across investment types, products and services
- Free access to human financial advisors
Cons
- Trading platform might not be extensive or sophisticated enough for experienced investors
- Some of SoFi’s proprietary ETFs carry high expense ratios
Who should use it?
Investors who want a one-stop shop for all of their money needs should consider SoFi.
Ally Invest
Best for DIY investors looking for a straightforward self-directed option
Commissions & fees
$0 stock & ETF commissions/$0.50 per option contract
Accepts payment for order flow
Yes
Automated investing option
Yes
3.4/5
Why we picked it
For everyday trading and investing, Ally Invest can work for most investors. If you’d like to add services, things can get somewhat confusing and, relative to some of the other names on our best brokerages list, less than attractive.
Lorem ipsum
Ally’s fee structure is standard. You’ll pay zero commissions to trade most stocks, ETFs and options. However, Ally does levy a $4.95 base plus $0.01 per share charge to buy and sell stocks that trade for less than $2. On options trades, Ally charges a $0.50 per contract fee.
Lorem ipsum
While Ally offers a wide range of account types for investors at all levels, this is where things get slightly confusing, compared to the more straightforward structures used by many of its competitors. For example, besides its self-directed brokerage account, Ally has robo-advisory options with a minimum investment of $100 and one-on-one financial advisory services.
Lorem ipsum
Ally’s cash-focused robo-advisory portfolio option sets aside 30% of the account balance as a “cash buffer.” This account charges no advisory fee. Investors can also opt for a market-focused portfolio that sets aside 2% of the account as cash and charges a 0.3% annual advisory fee. As of May 2024, both accounts pay 4.2% in annual interest on the uninvested cash. If you’d like to step up to personal financial advice, you’ll need at least $100,000 and pay a 0.85% advisory fee on your first $250,000.
Lorem ipsum
Ally’s self-directed brokerage account does not pay interest on uninvested balances, however, the firm’s banking arm pays a 4.2% APY on all balances.
Pros
- Offers options for all types of investors
- Low basic fee structure on stock, option and ETF trades
- Two robo-advisor options with unique cost and portfolios structures
Cons
- Relatively high one-on-one financial advisor fees and minimums
Who should use it?
Investors who want straightforward self-directed investing might want to consider Ally’s brokerage options.
Firstrade
Best for options traders
Commissions & fees
$0 stock & ETF commissions/$0 per option contract
Accepts payment for order flow
Yes
Automated investing option
No
3.3/5
Why we picked it
Like Webull, Firstrade works best for options traders. This isn’t to say it lacks in other areas. With Firstrade, investors pay no commissions to trade stocks, ETFs and options. Firstrade does not charge assignment/exercise or per-contract fees on options trades. There is also no charge for streaming or real-time quotes.
Lorem ipsum
Firstrade’s options trading platform is second to none. It includes a well-thought-out schedule of education modules and an Options Wizard that helps you visualize how trades you’re considering might play out.
Lorem ipsum
For beginners, Firstrade offers fractional shares investing in more than 4,000 stocks and ETFs.
Lorem ipsum
Firstrade does not offer automated investing of any type. And while it has a cash management account, it requires account equity of $25,000 to unlock banking services, such as check-writing and an ATM/debit card, and a relatively paltry 0.45% interest rate on uninvested cash.
Pros
- Low fee structure across equity types
- Solid platform for options traders
Cons
- Inferior cash management account
- Could be too advanced for beginners
Who should use it?
Investors who frequently trade options should consider Firstrade.
Our picks at a glance
| Brokerage account | Commissions & fees | Accepts payment for order flow | Automated investing option |
|---|---|---|---|
Fidelity Investments | $0 stock & ETF commissions/$0.65 per option contract | No | Yes |
Merrill Edge | $0 stock & ETF commissions/$0.65 per option contract | No | Yes |
Charles Schwab | $0 stock & ETF commissions/$0.65 per option contract | Yes | Yes |
Vanguard | $0 stock & ETF commissions/$1 per option contract | No | Yes |
E*TRADE | $0 stock & ETF commissions/$0.65 per option contract | Yes | Yes |
Interactive Brokers | $0-$0.005 stock & ETF commissions/$0.15-$0.65 per option contract | Yes (IBKR Lite only) | Yes |
Webull | $0 stock & ETF commissions/$0 per option contract | Yes | Yes |
SoFi | $0 stock & ETF commissions/$0 per option contract | Yes | Yes |
Ally Invest | $0 stock & ETF commissions/$0.50 per option contract | Yes | Yes |
Firstrade | $0 stock & ETF commissions/$0 per option contract | Yes | No |
What to look for in a brokerage account
- No-commission stock trades: Virtually all brokerages have stopped charging commission for most stock trades. For many investors, paying to buy or sell a stock is a dealbreaker. For other types of trades, such as options, ETFs and mutual funds, look for platforms with the lowest fees on options trading and a large selection of no-fee funds.
- Appropriate features: If you’re a beginner or small investor, you might want a brokerage that’s heavy on education and lets you buy fractional shares. If you’re an experienced and active trader, you might look for advanced features such as technical analysis tools or access to foreign markets. Try to find a broker with bells and whistles you’ll actually use.
- Broad selection: Here again, it depends on your needs. However, many brokerages provide a one-stop shop for all of your investing needs. You can set up an individual retirement account (IRA), trade stocks, buy mutual funds and ETFs, trade crypto, park cash in liquid accounts and maybe even have access to currency trading and foreign stock markets. As with features, balance investment selection with your needs and wants as an investor.
- Low obstacle to entry: Particularly if you’re a small, DIY investor, find a brokerage with no or very low initial and subsequent minimum investment requirements. Along with this, consider the onboarding process. How efficient (and cost-effective) is account opening, depositing money and transferring assets from another bank or brokerage?
What are brokerage accounts?
Similar to a bank account in terms of how you set it up, a brokerage account differs in that it’s the platform from which you invest your money.
After depositing funds, typically from a bank account (or another brokerage), you can buy and sell stocks, mutual funds, ETFs, options and, in some cases, alternative investments, such as cryptocurrency. Many offer cash management features and relatively low-risk saving and investment options, such as certificates of deposit (CDs) and money market mutual funds.
What to consider when choosing a brokerage account
Our list of the best brokerage accounts for June2024 ranks firms based on the considerations that matter to large numbers of investors.
Among the most important factors are fees and commissions. While most brokerages provide commission-free stock trading, pay attention to what they charge to make other types of trades. Our rankings take into account which firms offer the ability to invest in mutual funds and ETFs and what you can expect to pay to trade options. In addition to trading costs, charges associated with account services, such as margin trading, transfers, withdrawals and account closure matter because, like commissions, they can ultimately eat into your investment returns.
Educational resources, the number of analytical tools available in a trading platform, types and breadth of customer support and the availability of everything from IRAs to robo-advisory services come into play, depending on your needs and experience level.
Pros and cons of brokerage accounts
To consider the pros and cons of brokerage accounts, start by comparing them with two primary alternatives — different types of cash accounts, typically held at banks or fintech firms, and retirement accounts.
Cash accounts
Some of the companies on our list of the best brokerage accounts offer cash accounts, including deposit accounts (checking or savings), money market accounts and other types of liquid investments. At brokerages, these options tend to range from accounts with all the features you’re likely to find at a traditional or online bank to a place to park your cash — and maybe earn some interest — before you invest it.
Whether you keep your cash with your brokerage or outside of it, the downside is that, while you’re taking on less risk sitting in cash, you’re generally forgoing the chance to realize higher returns on your money. For comparison, even with interest rates on many high-yield savings accounts hovering around 5% in 2024, the stock market, as measured by the , has generated a relatively robust 12.9% annualized total return over the past 10 years.
Retirement accounts
Most retirement accounts, from workplace plans to IRAs, offer some type of tax benefit. These tax-free or tax-deferred accounts are often housed in the same platform as your brokerage account, but they are ultimately separate accounts that are taxed according to their own rules. With a brokerage account, you will pay taxes on interest, dividends and capital gains in the year you realize them. Therefore, if you’re looking for tax-deferred growth of your investments or another type of tax break, a taxable brokerage account isn’t a great option.
Other alternatives to brokerage accounts
You can also purchase mutual funds directly from the fund family or company. For most investors, however, it’s simply easier to buy mutual funds via a low-cost brokerage. And, in some instances, mutual funds make sense, as with Fidelity’s aforementioned suite of zero-expense-ratio mutual funds.
Other alternatives typically include taking a markedly different investment path, usually not offered by traditional online brokerages. For example, you can invest with platforms that specialize in real estate (or purchase real estate directly) or private equity offerings instead of opening a brokerage account.
Safety of brokerage accounts
In terms of investment risk, you’re pretty much on your own. While brokerages often warn investors about risk, particularly before opening a margin account or placing an options trade, it’s up to you to safeguard yourself against losses.
No government regulation addresses, as the Financial Industry Regulatory Authority (FINRA) calls it, “ordinary market loss.”
However, the Securities Investor Protection Corporation (SIPC) does provide “limited coverage to investors on their brokerage accounts if their brokerage firm becomes insolvent. All brokerage firms that do business with the investing public are required to be members of SIPC. SIPC protection covers the replacement of missing stocks and other securities up to $500,000, including $250,000 in cash claims. However, it does so only when a firm shuts down due to financial circ*mstances in which customer assets are missing — because of theft, conversion or unauthorized trading — or are otherwise at risk because of the firm’s failure.”
The US Securities and Exchange Commission (SEC) maintains various checks on brokerages, which include liquidity requirements and the safekeeping of customer money.
Methodology
To construct our list of best brokerage accounts, we examined 24 popular accounts from both legacy brokerage firms and newer, online financial services companies, as determined by our expert editors. We then scored each brokerage account according to 12 key factors:
Tradable assets classes (20%)
Brokerage accounts offering the ability to trade more asset classes were scored higher, as they give users more flexibility with their investments.
Monthly cost (17.5%)
Brokerage accounts that charge users a monthly subscription fee were scored lower.
Automated investing option (15%)
Brokerage accounts that offer automated or robo-advisor portfolios were scored higher, as they provide users with greater flexibility to manage their investments.
Payment for order flow (10%)
Brokerage firms that receive payment for order flow were scored lower, as this may present a conflict of interest between brokers and customers.
Order execution quality (10%)
The more often a brokerage firm executes orders at or better than the National Best Bid and Offer (NBBO), the higher it was scored. Brokerage firms that do not disclose this information were scored lower.
Account minimum (7.5%)
Brokerage firms with minimum account size requirements were scored lower, as this may limit who can open an account.
Option contract fees (5%)
While all the brokerage firms we examined charge no commissions for stock and ETF trades, option contract fees were factored into our ranking, as these costs can eat away at returns over time.
Minimum to start investing (5%)
Brokerage accounts that require a minimum investment amount were scored lower. Although minimums are generally low, this poses another barrier to entry for some users.
Company disclosures (2.5%)
Brokerage firms with fewer SEC disclosure events were scored higher, as disclosures are an indication of customer complaints, regulatory actions or other legal issues.
SEC registration date (2.5%)
Brokerage firms that have been SEC-approved for a longer time were scored higher, as this can indicate a more reputable and reliable company.
Level II quotes (2.5%)
Trading platforms that offer Level II quotes, whether for free or at a cost, were scored higher. This is often a must-have feature for day traders who want an in-depth view of the markets.
Fractional share trading (2.5%)
Trading platforms that offer trading of fractional shares were scored higher, as this feature allows traders of all account sizes to transact in higher-priced stocks.
Frequently asked questions (FAQs)
When choosing a brokerage account, consider account fees, not limited to trading costs, investment selection and the scope of the platform. These are the best places to start. Your experience level and needs as an investor matter here. If you only invest in stocks and ETFs, it probably doesn’t matter to you if a brokerage facilitates crypto or currency trading. If you’re a super-experienced investor, the education section of a brokerage platform might go unused. The best platform for you will likely be the one where you’ll incur the lowest fees alongside features that enhance, but don’t get in the way of, your investing experience.
As indicated, the SIPC provides investors with limited coverage if a brokerage fails. However, SIPC coverage is not as comprehensive as the Federal Deposit Insurance Corp. (FDIC) insurance that covers deposit accounts, and it does not protect against declines in the value of investments held at brokerage firms.
Our CNN Underscored guides to the best trading platforms for beginners and the best day trading platforms can help answer this question. But it comes down to your needs. Day traders often require features such as advanced stock charting, whereas beginners might prefer sections dedicated to simulated trading and educational modules.
One of the best ways to diversify your portfolio — with any amount of money — is to invest in broad, market-tracking index ETFs. Many of these funds have low fee structures and give investors exposure to broad swaths of the economy with a focus on the world’s largest corporations.
