January 2015: Annual Commissions Review

In this month’s Broker Monitor Report, we conduct our annual review of commissions charged by both self-directed and full-service brokerage firms in our Broker Monitor competitive set. Similar to previous commission reports, we forego the standard monthly report format and instead house our findings within two matrices. First, we offer the Self-Directed Commission Matrix, which provides an overview of discount broker commissions divided by product: Stocks & ETFs, Options, Mutual Funds and Fixed Income. Though most clients conduct their trading online, we also review commissions charged for automated phone systems and broker-assisted trades.

A second, briefer matrix charts the commissions charged by the full-service brokerage firms in our coverage group. Given that many advisors have wide latitude in enacting commissions (generally based on account size, order size or security purchased), it is often difficult to uncover concrete commission pricing information online or through customer service representatives. To rectify this, we contacted our dedicated advisors at the six remaining full-service firms.

While the majority of Broker Monitor firms maintained the same commission pricing over the course of the past year, we observed some meaningful trends. No discount brokerage made any changes to its standard online Stock & ETF trade commission over the course of 2014.

Additional key findings include:

  • Currently, five firms offer free trade promotions to entice clients either to open a new brokerage or retirement account or to further fund an existing account.
  • Two firms incorporate free/reduced trade commissions directly into their standard pricing schemes.
  • On average, most discount brokerages charge around $0.75 per options contract on top of their standard online trading commission.