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JUNE 2012

OURANNUALSURVEY

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Article copyright 2012 by SmartMoney. Reprinted from the June issue with permission from SmartMoney. The statements and opinions expressed in this article are those of the author.

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TEXT,TWEET,TRADE

MOSTPEOPLESELDOMhear fromtheirbroker; theymaygetanoccasionale-mailhere, a letter there, and perhaps the rare phone call. But these days, brokers aredoinganewkindofoutreach: textmessaging,oftenwitha littlenudgetotrade.Andthat’s just the tipof the tech iceberg.Someenticeclients todownloadamobileappthat lets theclientphotographaproduct’sbarcode to find themaker’s ticker sym-bol.Thentherearethe less-subtlehints fromservices likeZecco’sZapTrade.When

acustomerbrowsescertainwebsitesandscrollsover thenameofapublicly traded firm,ZapTradeslapsabigZnext to thename,andthecustomercantrade thestockright thenandthere. “Wereachout and grab themby the lapel,” saysMichael Raneri, chief executive officer of ZeccoHoldings.

Grabbing, shakingandnudging(nottomentionpokingandtweeting) investors,brokersaregoingtothemattoenticetheirclientstoact less likenervousMainStreet investorsandmorelikeconfidentpros. Inthepastyearalone, firmshaveunleashedaslewofmobile tradingapplications, socialmediatools, investing videos and seminars—manydesigned tobe asunintimidating as aquick roundofAngry Birds. (Snapstock, that bar code–photo app, was devised by TDAmeritrade to encouragefemalecustomers to turnshoppingsprees into investment ideas, thebrokeragesays.)Theubiquityof sophisticatedsmartphonesand tabletshas fueled the techproliferation, of course.But IsabellaFonseca, researchdirector forwealthmanagementatCelent,aconsultingfirmfocusingontechnolo-gy and finance, says all that gear is aimed at one goal: “Getting customers to trademore.”

Indeed, if brokerage firms are grabbing customersmore often, experts say, that’s because it’soneof the fewwaystoshakeanymoneyoutof them.Afteryearsofduking itoutonpricing,discountbrokerscan’t lowercommissionsmuchfurtherandstill earnaprofit. (Theaverageprice forabasicstocktradeamongdiscounterswesurveyedthisyear is$7.96,downfrom$8.27 lastyear.)Meanwhile,sluggish stockactivity is squeezingan industry that reliesheavilyon tradingvolume for revenue.Inthenewtechboom,at least somebrokersseeachancetoturnthataround, saysDavidLo,directorof investment services at J.D. Power andAssociates.

Notcontentwithcajoling theirowncustomers, firmsarealsowooinghigh-volumetradersawayfromotherbrokerages. Severalhave launchedsites aimedat “active traders,” generallydefinedascustomerswhoplace 10ormore tradesamonth.Andmanyhavestartedemphasizingmore-exotic

BY J. ALEXTARQUINIO

Illustration by Ryan Etter for SmartMoney

The brokerageindustry hopesnew technologywill get investorsexcited abouttrading stocksagain. Butunderneaththe bells andwhistles, whichbrokers arereally best forinvestors?

52 SmartMoney | June 2012


SMARTMONEY

2012ANNUALBROKERSURVEYCOMMISSIONSAND FEES

THEBEST&WORST

CUSTOMERSERVICE

RESEARCH

TRADINGTOOLS

MUTUALFUNDS AND

INVESTMENTS

BANKING

June 2012 | SmartMoney 53


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$7.95 HHH HHHHH HHHHH HHHHH HHHHH HHH

7.00 HHHHH HHHH HHHHH HHH HHHH HHHH

9.99 HH HHHH HHHHH HHHHH HHHHH HHH

9.99 HH HHHH HHHH HHHHH HHHHH HHHH

8.95 HHH HHHH HHHHH HHHH HHHHH HHH

4.95 HHH HHH H HHH HH HHHHH

4.95 HHH HHH H HHH HHH HHHH

6.95 HH HHHH HHHHH HHH HHH H

9.95 HHHHH H HHH HHH HH H

8.95 H HHH HHHH H H H

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on stoCk **per trade**

Commissions†and Fees†

mUtUaL FUnds and

inVestment prodUCts

BankinGserViCes

tradinG††tooLs††

‡researCH‡

CUstomer serViCe *rank* Broker Comment

investments—includingoptions, futuresandcurren-cy trading—thatyieldhighercommissions.CharlesSchwab, forexample,courtedboththeactiveandtheexotic last yearbybuying tech-proficient specialtybrokerOptionsXpress.

Inall thesearenas, technology iskeytothecourt-ship. A year ago, many of the firms didn’t yet haveapps forsmartphonesor tabletdevices like the iPad.Now,almostalldo.All thiseasyaccountaccess isn’tnecessarilyagoodthing;criticspointoutthattradingmore canmean running up extra costs—and extrarisk,as investorstrytotimethemarket.Butthestrat-egyisclearlyachievingitsgoalofprimingcustomers’trigger fingers. During a pilot program for Zecco’snewiPhonetradingappinJanuary, thealreadyactivecustomerswhowereselected toget a first crack in-creased their trading activity by 10 percent.

Of course, many self-directed investors wantmore from their brokers than just the ability totrade whenever and wherever they like. That’swhereourannual surveyofbrokers comes in.Alongwith tech, we look at service, which is still a highpriority—customersnot onlywant quick access toadvice andhelp over thephonebut also lightning-fast responses to e-mails and instant messages.(Surprisingly,many big brokers still do poorly onthis front, as we discoveredwith our own batteryof customer-service tests.) But even the cheaperbrokers are learning that if they bumpup the con-venience factor, customerswill come—and, in somecases, even trust the firmswith their bankingbusi-ness.Time-pressedconsumers increasingly expecttheir brokers to be able to respond instantly, saysLo. “God forbid something goes wrong with atrade.” For our annualbroker survey, SMART-

MONEYtookaclose lookat which firms did anddid not live up to suchexpectations.

COMMISSIONSAND FEESBEST:SCOTTRADEWORST:WELLSTRADE

WhenSMARTMONEYdid its firstdiscount-broker survey in 1994, theaverage com-mission for a stock trade at a discount

broker was $28. Today, it’s less than $8.Brokersarestill competingforcustomersby cutting prices—this year’s average isabout4percent lowerthanlastyear’s.Butithasn’tbeengreat for theirbottomlines:Thenation’sbrokersearned$14.3billionfromstock-tradingcommissions in2010(themost recentyear available), down8percent fromthepreviousyearandmore

$4.95Price of a stock trade onZecco andTradeKing—but both charge steepfees for other services.

Illustrations by QuickHoney for SmartMoney

SMARTMONEY 2012ANNUALBROKERSURVEY

*Criteria are not equallyweighted. **Commission on a100share trade at $20a share. †Forclientswith a brokerage balance of $50,000whomake asmany as five trades amonth. ††Includesdata fromGomez. ‡Includes data fromCorporate Insight.

2012BROKERRANKINGS

FidelityFidelity.com

ScottradeScottrade.com

TD AmeritradeTDAmeritrade.com

ETradeETrade.com

Charles SchwabSchwab.com

TradeKingTradeKing.com

ZeccoZecco.com

Merrill EdgeMerrillEdge.com

ShareBuilderShareBuilder.com

WellsTradeWellsFargo.com

Top spot for third year running.Offers the biggest selection of fundsand the most comprehensive website.

Doesn’t have the cheapest stocktrades but compensates for that withfew fees on nearly everything else.

Want to trade? Its website andmobileapps are topnotch, but slow emailand phone response times hurt.

Its 247 online chat feature is a nicetouch, but its fees are above those atrival firms.

Offers a wide assortment ofinvestment and banking options. Itsfees on some services aren’t cheap.

Has strong customer service, butcustomers can’t get stocks listed onforeign exchanges.

Doesn’t have riskassessment orautomated assetallocation tools.Lacks many banking services.

It can be your bank and your broker,but high fees and slowtoexecutetrades keep it from ranking higher.

Offers low fees, but its customerscan’t buy individual corporate orgovernment bonds.

Online trades were slow to execute.Got lowmarks for its website, tradingtools and research offerings.


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9.99 HH HHHH HHHH HHHHH HHHHH HHHH

8.95 HHH HHHH HHHHH HHHH HHHHH HHH

4.95 HHH HHH H HHH HH HHHHH

4.95 HHH HHH H HHH HHH HHHH

6.95 HH HHHH HHHHH HHH HHH H

9.95 HHHHH H HHH HHH HH H

8.95 H HHH HHHH H H H

Commission

on stoCk **per trade**

Commissions†and Fees†

mUtUaL FUnds and

inVestment prodUCts

BankinGserViCes

tradinG††tooLs††

‡researCH‡

CUstomer serViCe *rank* Broker Comment

than30percent fromtheirpeak in2002.AndmarketresearchfirmIbisWorldesti-mates thatcommissions, asapercentageofbrokers’ revenue,will keepsinking forthe next five years.

Theresult, industryconsultantssay, isthat the deals brokers giveth with onehand,theyoftentakethawaywiththeoth-er.Feesforotherservicesandadministra-

tive work unrelated to trading have be-come a more important source ofrevenue—andconsumers,notsurprisingly,are befuddled: In a J.D. Power survey in2011, only 36 percent of customers saidtheycompletelyunderstoodtheirbroker-age’scommissionstructure,downfrom52percenttheyearbefore.CountJeffFleish-hackeramongtheconfused.Fleishhacker,

anITmanageratanonprofit inBrooklyn,N.Y., signedupforaMerrillEdgeaccountlast fall; because of the amounthehad inhisBankofAmericaaccount,hethoughthewas eligible for a fee-free trading deal.(Merrill Edge was created after Bank ofAmericaacquiredMerrillLynch,in2009.)But just as hewas about to trade,MerrillEdge’s website said he was going to get

SOURCE: SMARTMONEYRESEARCH

All the apps, tweets and texts are great, but customers are still looking for brokers they can count on. Inour survey, we evaluate a variety of categories, and put an extra emphasis on customer service. Here’show the largest discount brokers stack up (see SmartMoney.com for details on ourmethodology).




EdwardJones

EDWARDJONES.COMNUMBER OF BROKERS: 12,300NUMBER OF BRANCHES: 11,450NOTEWORTHY: Best stock picksin 2011

n Edward Jones bounds back intothe top spot in our survey, in nosmall part because of its stockpicking in 2011. Not only did thefirm’s recommendationsoutperformStandard&Poor’s500stock index, but its customersalso gave the firm highmarks forits stock research. That helped thebrokerage recover from its poorshowing as a stock picker last year.The St. Louis–based firm says thatin 2011 themarket favored thelarge, highquality stocks (thinkColgatePalmolive and IBM) that itgenerally recommends. On the techfront, Edward Jones has beendiving into socialmedia—postingvideos about investing strategy toits YouTube channel and tweetingdaily on Twitter. It also gets highmarks for customer satisfactionand trust in independent surveys.

UBS

UBS.COMNUMBER OF BROKERS: 11,200NUMBER OF BRANCHES: 300NOTEWORTHY: Strong website andcustomer satisfaction

nUBS is among a handful of fullservice brokerages that get it whenit comes to theWeb, a factor thathelped it leapfrog from fourthplace last year. Research firmCorporate Insight found theUBSsite particularly comprehensiveand easy to navigate. Itsmanyfeatures include clear and detailedstock charts that let users add andsave their own research notes;sophisticated activetrader types,meanwhile, can feast on arcanetechnical indicators like BollingerBands and stochastics. (Investorstowhom those termsmeannothing needn’t feel left out:UBS also gets highmarks for thesimplicity of its statements.)TheU.S. armof this Swiss financialgiant has created a “travelingoffice”mobile application forits advisers.

RaymondJames

RAYMONDJAMES.COMNUMBER OF BROKERS: 5,100NUMBER OF BRANCHES: 2,350NOTEWORTHY:High customersatisfaction

n Last year, Raymond Jamesredesigned its customerwebsiteand added an onlinebillpaysystem, both enhancementswelike to see. But glitches remain: Thesite still fares poorly for userfriendliness, according toCorporate Insight. Chet Helck, thechief executive officer of the globalprivate client group, says the firmhas hired a new technology teamand thewebsite is continuing toevolve, withmore changes “on tapthis year.” Clients, overall, remainhappy, however: In a survey by J.D.Power&Associates, they gavetheir relationshipswith theirindividual Raymond Jamesadvisers particularly highmarks.Comparedwith its competitors,the firm also does a good job ofclearly communicating itscommissions and fees.

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chargedacommission.Hecalledcustomerserviceinconfusion.Onlythen,hesays,didhe learn the money in his bank accountdidn’tcounttowardtheminimumneededtogetfreetrading.“Itseemedlikeajoke,”hesays.MerrillEdgesaysthatit isrevisingits eligibility rules to make it easier forsomecustomerstoget thefreebietrades.

Ask a broker for anything other thanbasicstocktransactions, industryobserv-erssay,andthefeescanquicklymountup.Ifyouwant tobuyamutual fundover thephonewithE-Trade, you’ll pay asmuchas$65per transaction.The firmsets thefeehighdeliberately, as adeterrent, saysE-Trade Securities President MichaelCurcio: “It’s soeasy togoonline—there’snoreasontogotothephone.”AndWells-Trade, the online discount-brokerage

FULLSERVICEBROKERSYoumight think themost affluent investorswouldget thebest techtools. But surprisingly enough, experts say,most fullservicebrokers arebehind the technological curve; theirwebsites lackfeatures that are standardamongeven runofthemilldiscounters. Gettingwired is a trickybalancingact for the fullservice crowd. “Wedon’t everwant technology to take theplaceofthe relationship,” says JimWeddle,managingpartner at EdwardJones. Indeed, fullservice brokerswant toavoid the impressionthat theyareabandoning thehandholding that sets themapart(andhelps justify their prices). Still, somebrokers are catchingup—not least becausebetter technology can improve customerretention, saysBill Doyle, an industry analyst at ForresterResearch.



armofWellsFargo, charges$95 to closearetirementaccount—afeethecompanysays isonparwith its full-servicebroker-age. Scottrade trumps theotherbrokersin this categoryby leavingmanyof thesefeesoutof itsequationandkeepingthingssimple. The brokerage charges $7 for abasic stock trade, and its commissionstructure is bracingly clear and easy tounderstand. TradeKing andZecco eachcharge less fora stock transaction:$4.95a trade.Butbothalsochargeadministra-tive fees that Scottrade avoids, such asTradeKing’s $50 account inactivity feeandZecco’s$30annualmaintenance feeforretirementaccounts. (TradeKingsaysthe feeshelp subsidize its customer ser-vice; Zecco says it needs to charge suchfeestokeepits tradingcommissions low.)

CUSTOMERSERVICEBEST:TRADEKINGWORST:WELLSTRADEThemarkethasbeendoingbetterof late,andbyat leastonemeasure, the love-haterelationship between customers andtheirbrokerage firmshasalso improved.The number of arbitration cases filedagainstbrokersso far thisyear isdown12percent from 2011, according to the Fi-nancial Industry Regulatory Authority,the industry’s self-financed regulatorybody.Part of this détente, experts say, isattributable toa senseof relative calm—duringthefinancialcrisis, customersandbrokeragesalikewere inpanicmode,andthe number of investor complaints wasalmost twice as high as today’s.

1 HOUR, 9 MINUTESTime it tookTradeKing to respondto our customer-service e-mail

45HOURSTime it tookTDAmeritrade

to respond

MerrillLynch

ML.COMNUMBER OF BROKERS: 17,300NUMBER OF BRANCHES: 722NOTEWORTHY: Big websiteimprovements

nMerrill has invested in anupgradedwebsite for its fullservice customers and launchedmobile applications that allowcustomers to trade and evendeposit checks. Still, the firmhasn’t regained the trust of clientssince the financial crisis. In a recentpoll by independent research firmForrester, only 40 percent of thebroker’s customers agreedwith thestatement “my financial adviserdoeswhat’s best forme, not justits own bottom line.” That’s upfroma year ago, but it remainsamong the lowest of the brokerswe reviewed. John Thiel, the headof U.S. wealthmanagement forMerrill Lynch, says this is anindustrywide problem: In theaftermath of the financial crisis, hesays,many investors still distrustWall Street in general.

Wells FargoAdvisors

WELLSFARGOADVISORS.COMNUMBER OF BROKERS: 15,250NUMBER OF BRANCHES: 1,500NOTEWORTHY:Ranks last in customersatisfaction

nAmong the brokers in oursurvey,Wells Fargo ranked last in acustomersatisfaction poll by J.D.Power, with the broker’s clientsgiving it lowmarks for theperformance of its investmentrecommendations and forwhat theclients perceive as high fees. Thosescores contributed toWells Fargofalling two notches fromour 2011survey. BrandMeyer, a seniormanaging director atWells Fargo,says the firm’s internal researchshows that customers are satisfiedwith their own advisers.Meanwhile,Wells Fargo has otherstrengths to build on, including itsaccount statements, which featurea chart outlining an account’sgrowth on the first page and havebeen hailed by independentresearch firmDalbar as “anindustryleading concept.”

Morgan StanleySmith Barney

MSSB.COMNUMBER OF BROKERS: 17,650NUMBER OF BRANCHES: 765NOTEWORTHY:Website gets lowmarks

nCustomers are clearly stilladjusting to all the changes at thismegasize broker, which emergedfrom the financial crisis followingMorgan Stanley’s purchase ofSmith Barney fromCitigroup in2009. Thousands of brokers havejumped ship, and customersatisfaction has dropped steeply. Inthemost recent J.D. Power survey,Morgan Stanley Smith Barneycustomers gave the firmmediocremarkswith regard to theirrelationshipswith advisers. Itscustomers aren’t happywith feeseither. (A spokesperson for thefirm questions the J.D. Powerresults, saying the survey “skewsto a lower demographic than ourcustomer base.”) On the brightside, the broker’swebsite stillranks among the better and clearerin the group.

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RESEARCHBEST: FIDELITYWORST:WELLSTRADETenyearsago, thequestion“Howgood isyourbroker’s research?”could translateroughlyto“HowmanystockreportPDFswill yourbroker let youdownload?”To-day theseresearchofferingsaresimulta-neouslymoredetailedandmorecasual.Fonseca, theresearchdirectoratCelent,says educational offerings suchasvideolibraries,webinarsandclientdiscussionforumshavegrown, inpart,because theyattract active traders or persuade othercustomers to trade more often. Social-media forums, forexample,where inves-tors trade ideaswitheachother,candriveuptradingvolume; they’rea“good, inex-pensivemarketing tool,” Fonseca says.

Indeed, research tools havebecomeso important thatmostof the brokers we reviewed arepretty evenly matched. Corpo-rate Insight, a financial-servicesresearch firm that studies bro-kers’marketcommentary,newsalertsand fundreports, gave topmarks to four of the 10 firmswestudied. Fidelity Investments,thewinner in this category, gets a slightedgebecause ithasbeenparticularlyag-gressiveaboutrelayingresearchviaTwit-ter and Facebook. The brokerage hasbeen moving many of the trading tools

But brokers say they’re also pushingto improve the relationship by beingmoreaccessible. Increasingly, thatmeansofferingagrowingnumberofdigital op-tions, fromonline chats to responses tocustomertweets.Allof thebrokers inoursurvey except forWellsTrade nowofferonlinechat (thebrokeragesays it’s study-ingwhether to offer the feature). OnE-Trade,customerscanchat24-7—presum-ablyhandyfor investorswhoareupinthemiddle of the night playing theNikkei.

The discount brokerages prefer thisformofcontactbecause it ismuchcheap-erthanstaffingcallcenters, saysLoofJ.D.Power.Still, thedigital communication ishardly seamless.Threeof the 10broker-ages inoursurveyfailedtorespondtooneor more of the test e-mails we sent totheir customer-servicedepartments.Onthe other hand, E-Trade responded al-mostoverzealously:Whenwesentane-mail throughthepublicwebsite inquiringabout opening an account, we were re-quired to give a phone number, and thecompanycalledusbackfourtimesbeforegivingup.DavidPoole, thebroker’s vicepresident of customer service, says thatsomequeries thatcomeinbye-mail “aremore involved, and a phone call ismoreappropriate.” It’savalidpoint:Foranyse-riousproblem,ofcourse, investorsgener-ally say they’d rather talk on the phone.So itwasdisappointing thatour tests in-dicatedthatphoneservicehasslackedoffa bit. In past years, the best-performingbrokersansweredourcallsbeforereach-ing the one-minute-on-hold threshold;this year, none did.

Customerswon’tmindtheholdtimes,experts say, as longas theadvice ishelp-ful.TradeKing,ourcategorywinner,doesa lot of communicating via socialmediaand responded the fastest to our test e-mails.ButDougSarbon,anAtlantaaudioengineer, has been relying on its phoneservice.SarbonbegancallingTradeKing’scustomer-service linealmostdailybackin2009,whenhe first started tradingop-tions, sometimestalkingtotherepresen-tatives forahalfhourat a time.After themarket closed on the day of the flashcrash in2010,hecalled thehelp line justto have a “What thehellwas that?” chat

witha friendly rep.He is sometimesputonhold forawhile,heacknowledges,buthe has been entertained by themoney-themed hold music—especially KennyRogers’s “TheGambler.”

and research features from its ActiveTraderProplatform—includingsophisti-catedchartsandcomplexoptionsalike—tothestandardsitemostof itscustomersuse.JamesBurton,presidentofFidelity’sretailbrokerage, says the firmis“democ-ratizing” those tools.Ontheotherhand,WellsTrade lacks a fewofwhat have be-comeonlinebrokerbasics:Featuressuchasanasset-allocation tool andpresenceonTwitter andFacebook, the firm says,are all “on our road map” but won’t beavailable until at least next year.

TRADINGTOOLSBEST: FIDELITYWORST:WELLSTRADEKirkDuplessis, a28-year-oldconsultantinLeesburg,Va., sayshesupplementshisincomebytradingbrisklyontheoptionsmarket.AndwhileDuplessis,a former in-vestmentbanker, ispretty sophisticatedabout the market, he does most of histradingonThinkorswim,awebsite that’sat least theoretically open to any JoeBlow.ThisonlineoptionsplatformfromTD Ameritrade lets him open multiplewindows and see his account balance,trading page and charts, all on the samescreen.ComparedwithwhatotherWeb-basedtradingplatformsofferedwhenhefirst started trading stocks—and evenwith what many are offering now—hesays, “it’s a different beast altogether.”

InaworldwheremoreMainStreet in-vestorsarecomfortable tradingat3a.m.(“We call it bedside trading,” says a TDAmeritradeexecutive), tradingtoolshave


14.5SECONDSProcessing timefor a trade on

WellsTrade—fourtimes slower thanthe fastest brokers



quicklyevolved.More than75percentofalldiscountbrokerageshave iPhoneappsnow,whilemore thanhalf have apps forAndroidphones.Brokers are convincedthat it’shaving thedesiredeffect:Amongthetop100financialexecutivessurveyedbyCorporate Insight, 68percent report-edthat theirmobileapplicationsarehav-ingapositive impactontheirbusinesses.

Fidelity wins this category, with E-TradeandTDAmeritradeclosebehind.Allthreeofferafter-markettrading, stream-ingquotesandoptionstradingviamobilephones. Of course, the most importantpartoftheonlinebrokerageexperienceisplacingatrade. Inoursurvey,whichuseddata from independent website testerGomez,Fidelitywasthefastestbrokerageattradeexecution,clockinginat lessthanfour seconds per trade. The two slowestbrokers of the bunch—WellsTrade (14.5seconds)andMerrillEdge(16seconds)—tookalmost twiceas longas the industryaverage. Merrill Edge says some recenttechnicalupgradesare improvingtradingspeed; Wells Fargo says security mea-suresmightaddextrasecondsto its trad-ing time.

MUTUAL FUNDSANDINVESTMENTSBEST: FIDELITYWORST:SHAREBUILDEROneof the longest-lastingdivides in thebrokerageworld isbetween theall-you-can-eatbuffetbrokersand thestripped-downfast-foodfirms.Theones inthefor-mer category—think Fidelity, CharlesSchwabandTDAmeritrade—have triedtooffer just about every investment op-tionacustomercan thinkof, fromgazil-lionsofmutual fundstomore-exotic fare,including futures, foreign-exchangetrades and options. Of course, brokerswhoprovidethesearen’t justbeingaltru-istic; themore-exotic investments tendto mean higher fees and bigger profitmargins.Forexample, theaverageoptiontrade at the brokerages in our surveycosts$25,morethanthreetimesasmuchas a stock trade.About 16percent of on-line customers now trade options, ac-cording to J.D. Power, and brokerages’

commissionsfromoptionstradingareupmore than 70 percent since 2005.

A lotof themoreesoteric investmentsarealsopopularwithactive traders,whotend to bemore lucrative customers. Infact, someinvestmentproductsareavail-ableonly tocustomerswhoarebig reve-nuegeneratorsacross theboard.Fidelity,however, offers a stunninglywide rangeof investingoptionstomostof itscustom-ers,andit’s thereasonwhyitwonthiscat-egory.Forexample,allofFidelity’s retail-brokerageclientscannowregisteronlineto trade directly in foreignmarkets.

Some brokers prefer to stick withmeatandpotatoes. ShareBuilder,whichfocusesalmostexclusivelyonstocks,mu-tual funds and exchange-traded funds,finished last in thiscategory.DanGreen-shields, ShareBuilder’s president, saysthe firm’saveragecustomerage isunder40.Thismeansthebrokerdoesn’tgeta lotof requests for, say, Treasurys. “We’llprobablyofferbonds30years fromnow,”whencustomersnearretirement,hesays.

BANKINGBEST:MERRILL EDGE,FIDELITY (TIE)WORST:ZECCOAfewmonthsago,Fideli-ty threw its marketingmuscle behind a newproduct rollout, an-nouncing thedebutwithbreathlesspress releasesand even a live Twitterbroadcast. Was all thehypeabout investing?Farfromit:Thenewprod-uct was an iPad appthat lets customerstakephotosof checks,

so they can depositthem into their Fi-delityaccounts.Andwhile Fidelity wasthe first broker toget the featureonaniPad, that firm andmanyof itscompeti-tors already hadphoto deposits for

smartphones. (Charles Schwab says itnowgetshalfof its customerdepositsviadigital picture.)

Thetechramp-upmaybenew,butthebroker-in-bank’s-clothingphenomenonhasbeenaround for awhile:Mostof thebrokers in our survey now offer creditcards,debit cardsandonlinebillpay thatare tied to brokerage-linked bank ac-counts. SophieSchmitt, ananalyst at thefinancial-services firmAiteGroup, saysbrokers make little to no profit fromthese services, but they’re still a majorpart of their marketing strategy. “It’sdonemostly for ‘stickiness’andcustomerloyalty,” she explains. And because thebrokersdon’thavesomeof theoverheadof traditional banks, like branch officesornetworksofATMs, analysts say, someofthemareprovidingsomemildlyattrac-tive perks, like higher interest rates onsavingsaccounts—orrefundsontheATMfees chargedby “real” banks. Somebro-keragesoffer theseperksonly to theirac-tive tradersorpeoplewith largeaccountbalances,but the three that finishedatornear the top for us—Fidelity, MerrillEdge and Schwab—offer good deals tosmaller account holders. The smallerbrokerages in our survey, on the otherhand,havevery little in thewayofbank-

ingamenities—nocreditcards, noATM-fee reim-bursements. (Raneri, theCEOof last-placebrokerZecco, says suchservicesdon’t fitwith its focusonactive traders.) S

4,800No-loadmutualfunds availablethroughZecco

700No-load funds

available throughShareBuilder

Some brokeragesspecialize in foreigncurrency trading. To seeour rankings on thosecompanies, go toSmartMoney.com.


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