Who Are 2019’s Best Online Brokers?

Post on March 13, 2019

Market volatility is commonplace. Interest rates, which a few months ago seemed certain to rise, now look likely to remain flat or possibly decline. The chances of an economic slowdown in the U.S. and overseas are high. So it’s tempting to follow the S&P 500, our own portfolios, and investment opportunities the way some of us check the weather—constantly and doggedly.

That stands in stark contrast to Merrill Edge’s industry-lagging $6.95 per trade. According to the Broker Monitor service of the consulting firm Corporate Insight, the average online commission rate among leading online brokers last year was $5.95, which is about a 27% decrease over the past five years. One measure of how far down commissions have come: The winner of Barron’s inaugural online broker ranking in 1996, Lombard Institutional Brokerage, charged an average of $34 a trade.

“Price compression” emerged as a big trend in 2018, according to Michael Ellison, Corporate Insight’s president. This past year major brokerage firms focused on “reducing expense ratios and lowering account minimums,” Ellison says. Fidelity, for example, initiated a no-minimum account policy.

Daily Average Revenue Trades, or DARTs, are the common metric the industry uses to measure revenue-producing trade commissions and fees. DARTs are down year on year for some firms, according to Corporate Insight. Merrill Edge, for one, showed a sharp dip in December.
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