Surveys are worthless. SmartMoney just released its 2012 survey of the best and worst brokers.
Let’s be honest here. I don’t trust movie reviews, so why would I put stock in a survey of investment brokers?
Part of the problem is that even the best surveys are of limited valued. For example, here are the categories SmartMoney used to rate brokers: commissions and fees, mutual funds and investment products, banking services, trading tools, research, and customer service.
Now there is nothing wrong with this list, per se, except that several categories are completely useless to me. And I suspect they are useless to most investors. For example, I don’t care about banking services. I don’t bank at my broker. And I also don’t care about research; there’s a ton of research available online.
While we can just ignore the rating categories that are of no interest to us, it skews the results. For example, the most important category to me is cost. Yet SmartMoney rated Fidelity as the #1 broker, even though it scored just 3 out of 5 stars on commissions and fees. Apparently its banking services and research are top shelf.
Still, I find it interesting to see how the “experts” are ranking the various brokers. As the internet has taken over, brokers have become more of a commodity, with price being the most significant factor for many investors. But there are some differences beyond price that are worth considering (e.g., Scottrade has offices everywhere, Sharebuilder makes small monthly investments possible at a reasonable cost).
So with my rant out of the way, here are the top ten brokers according to SmartMoney:
- TD Ameritrade
- Charles Schwab
- Merrill Edge
Here are the details of the rankings (click to enlarge):