Online Broker Comparison: How IBD Found America's Best Online Brokers – Investor's Business Daily

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For the 10th year in a row, Investor’s Business Daily and TechnoMetrica Market Intelligence collaborated on a study measuring investor sentiment toward brokers’ performance in a variety of critical service areas. Every year, the Investor’s Business Daily Best Online Brokers survey has asked investors to rate their primary online broker based on the most important and desirable broker attributes.
Results are arranged to help investors in online broker comparison.
We use the individual ratings assigned to the attributes to compute an overall customer experience index score for each broker. These indexes form the basis of the Best Online Brokers rankings.
This year’s study follows the two-phase methodology employed in previous years. Both phases use online surveys to collect data.
The objective of Phase I is to determine which features and services offered by online brokers are most important to investors. In September 2021, we conducted an online survey of 589 visitors to IBD’s Investors.com website to test 25 potential attributes for inclusion in Phase 2 of the study.
Using the Maxdiff trade-off technique in Phase 1, we selected 15 characteristics for inclusion in Phase 2, based on the relative importance that investors placed on each characteristic. The Phase 1 survey presented each respondent with 10 sets of attributes; each set included five randomly chosen characteristics from the potential pool of 25. Respondents identified the most and least important attributes in each group.
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We reduced the 25 attributes to 15 based on the results of the Phase I survey. Phase 1 also assisted us in determining the weights for the 15 features that would be used to calculate the Overall Customer Experience Index for each broker.
online broker comparisonThe top six attributes together accounted for 55% of the importance. Trade Execution/Speed/Price, Website Security, Equity Trading Platform, Site Performance, Customer Service, and Research Tools emerged as the top six attributes.
The other nine attributes shared the remaining 45% of the importance: Investment Research, Portfolio Analysis & Reports, Mobile Trading Platforms/Apps, Coverage of Premarket and After-hours Trading, Incentives/Discounts/Pricing, Options Trading Platform, Trade Ideas, Availability of Account Types, and Educational Resources.
Phase 2 of the study measured consumers’ experience and satisfaction with their primary online broker.
From October to December 2021, the Phase II survey garnered the participation of 4,736 investors. Of those, 2,286 were IBD website visitors, while the other 2,450 came from TechnoMetrica’s consumer panel partners.
To qualify for the ranking in our online broker comparison, a broker must have at least 125 customers who took part in our Phase 2 survey. Charles Schwab (SCHW), E-Trade/Capital One Investing/ShareBuilder, Fidelity Investments, Interactive Brokers (IBKR), Robinhood (HOOD), TD Ameritrade (acquired by Schwab in 2020), the Ally Invest unit of Ally Financial (ALLY) and Vanguard Brokerage met this threshold.
In Phase 2 of the survey, investors rated their primary broker on the 15 attributes using a five-point scale (Excellent, Very Good, Good, Fair and Poor).
We developed a Customer Experience Index for each broker attribute using the following question: Based on your experience with your primary online broker during the past six months, how would you rate your primary online broker?
The Customer Experience Index denotes the difference between the percentage of respondents giving ratings of Excellent and Very Good and the percentage who gave ratings of Fair and Poor. Based on the Customer Experience Index ratings, Investor’s Business Daily identified the three Best Online Brokers in each of the 15 categories.
We computed the Overall Customer Experience Index for each broker using the weights developed in Phase 1 for the 15 attributes. The three firms with the highest Overall Customer Experience Index ratings are IBD’s Best Online Brokers overall.
Raghavan Mayur is president of TechnoMetrica Market Intelligence.
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In an era in which choosing an online broker is more nuanced than ever, the IBD 2022 Best Online Brokers survey can speed you to the right one for you. (Elizabeth Plumb/stock.adobe.com)
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