Investing

Motley Fool vs. Zacks vs. Morning Star Comparison

Investors seeking advice may be tempted by one of the subscription services offered by Motley Fool, Zacks, or Morningstar. Are these services worth the cost? And which one is right for you?

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There are many tools or services to consider when you want to become a better investor. Motley Fool, Zacks, and Morningstar are great examples of services/tools proven to empower investors. While investors are supposed to do their own research, it helps to have tools or services that make it easier to make informed investment decisions.

At the top of the list of investment research services/tools are Motley Fool, Zacks, and Morningstar. Below is a detailed comparison of these services touching on everything from their unique features to their investment goals and suitability depending on the type of investor in question. Before you decide on any of the three premium investment research services, read this detailed comparison guide below to find out which one matches your investment needs.

About Motley Fool

Motley Fool can be described as a stock picking service. Individuals who sign up get newsletters offering stock picks believed to have growth potential.

The service is almost three decades old. Motley Fool was established in 1993 in Alexandria, Virginia, by two brothers -Tom and David Gardner as a private finance and investment advice company. Currently, Motley Fool's primary business is offering stock research, analysis, and recommendations.

Tom and David Gardner are still at the helm of their company, offering top stock picks in their leading weekly newsletter.

As the name suggests, Motley Fool takes a casual-professional approach towards investment. The service offers many subscription offerings, the most notable being Stock Advisor. This newsletter provides subscribers Tom and David’s stock picks (best buys and new picks) every week.

Besides having paid offerings, The Motley Fool website has free content giving website visitors a glimpse into what they stand to gain from paid subscriptions.

The Motley Fool's paid subscription service boasts of offering a 570% return since being launched in 2002, outperforming the S&P's 114% equivalent over the same period to October 2020.

About Zacks

Zacks Investment Research (popularly known as Zacks) is a service that offers investment-related and independent research content. The company was founded over four decades ago (in 1978) by Len Zacks, a Ph.D. (Operations Research) from MIT.

The company offers professional investors research analysis and data to help its customers make better investment decisions.

Zacks is famous for its EPS (earnings per share) estimates. However, the company offers other related products ranging from research reports to recommendation summaries on funds, stock prices, and additional investment tools/data.

Both professional and individual investors use Zacks' services. The company has Mobile and API products that make Zacks a popular source of investment information and seasoned investors' business intelligence.

Zacks also stands out for having a stock-rating system that is purely math-based and free of influence from Wall Street among other third parties and agendas that tend to sway typical stock-rating systems.

Zacks is trusted by significant financial data & media companies like Bloomberg and WSJ. Zacks receives research reports and electronic data feeds on 8,500+ publicly traded companies in North America from 185+ brokerages amounting to 500,000+ pages of broker research. The company also records 25,000+ earning estimate changes in broker recommendations every week. The information is availed through product lines and finance-related sites like Bloomberg, FoxBusiness, and MSN MoneyCentral.

About Morningstar

Unlike Motley Fool, which focuses on stocks and Zacks on EPS estimates, Morningstar is an investment research service that focuses on ETFs (Exchange-Traded Funds) and mutual funds.

Morningstar was established in 1984 by American Billionaire entrepreneur Joe Mansueto. The company can qualify as an investment research organization famous for rating ETFs and mutual funds. The company's services are depended on by many prominent brokerages, a testament to research quality.

Besides offering ETF ratings, Morningstar also rates stocks and offers credit rating services, among other essential services for individuals and professionals. Investors gain access to many investment tools, reports, and ratings on stocks, bonds, funds, and more. Morningstar has free and paid services.

How Motley Fool, Zacks, and Morningstar Work

How Does Motley Fool Work?

Motley Fool works like a subscription service. One of the main subscriptions, dubbed Motley Fool Stock Advisor, offers weekly stock recommendations from Tom and David Gardner. The recommendations come in emails, text, or both, highlighting the best stocks and new recommendations.

Motley Fool stock picks have outperformed S&P investments considering David Gardner's average return is 8X while Tom Gardner's is 3X. Generally, Motley Fool subscribers feel the service offers well-reasoned stock picks and analysis.

While Motley Fool sends subscribers sales messages and attempts to upsell services, most subscribers are happy with the service.

How Does Zacks Work?

Zacks also works as a subscription service, with most customers subscribing to the Zacks Premium newsletter that offers recommendations, reports, and rankings. Subscribers can use tools such as My Portfolio Tracker to assess their portfolios and view ranking for every stock/security.

Subscribers receive breaking news daily and updates on their security ranking alongside a recommendation on whether to buy or sell. Len Zacks doesn't shy away from recommending a sale if his quantitative methods justify such actions.

Subscribers know if they should hold stocks in the short term or long term. As per several professional research analysts, Len Zacks only ranks stocks highly if their earnings per share estimates are predicted to increase.

According to Len Zacks, his service works best and gives his subscribers an advantage because his team considers both technical and fundamental analysis. The service offers numerous analytical tools. Len Zacks has a list of 50 stocks dubbed Focus List specifically for long-term performance.

Most importantly, Zacks caters to all types of investors. Seasoned investors have services such as Investor Collection. This service is meant for long-term investors. Investor Collection offers real-time buy/sell signals for long-term investors.

Another service dubbed Ultimate offers private picks and market insights from all portfolio recommendation services. This service ensures investors get the best picks that match unique investment approaches.

Zacks also works as a trading platform with all services at a low cost. With Zacks' trading platform, you can get research insights and trade at the same time.

How Does Morningstar Work?

While Morningstar offers free content, Morningstar's premium membership stands out with features such as in-depth research on over 600,000 securities and a list of best investments (stock and funds) simplified into useful categories.

The best investments page features a list of the best stocks, mutual funds, and ETFs. The service empowers you to select the best investments individually. The vast stock and fund portfolio coupled with tons of data, analysis, and expert ratings make it possible to select winning picks independently.

Before you become a committed paying subscriber, there is a 2-week trial for Morningstar premium subscribers. The platform is user-friendly and packed with resources that the typical investor can't exhaust.

Unique Features of Motley Fool, Zacks Premium, and Morningstar

While all services are focused on helping investors, they have notable differences. Let's begin with the similarities.

Similarities

  • Premium subscription investment services: Motley Fool, Zacks, and Morningstar are all premium investment services given the subscription business model utilized by all services and services' pricing.
  • Risk-free trial: You can test all services risk-free. Zacks' premium & Motley Fool's stock advisor come with a thirty-day free trial. Morningstar Premium has a 14-day trial. You can use all these services for two weeks to a month for free. If you don't like them for whatever reason, you can ask for a 100% refund.
  • Free investment resources: All services have free resources. You don't need to pay anything to get a glimpse of what it's like to become a paying subscriber. The services have resource centers that show what to expect.

Differences

Unique Features of Motley Fool

Motley Fool stands out for several things, the most notable being;

  • Fun name and approach: The name itself tells a lot about the fun approach this service takes.
  • Stock recommendations and newsletter: Motley Fool offers new stock recommendations weekly alongside a newsletter that has detailed information on stocks.
  • Focus: Motley Fool Stock Advisor deals with 10 to 15 stocks at a time. The focus is narrower (powered by in-house staff) compared to Zacks services, which get recommendations from all over, including Wall Street analysts.
  • Hold strategies: Motley Fool specializes in long-term buy strategies. Other services like Zacks have a rating strategy aimed at delivering profit in the short-term and long-term.

Visit The Motley Fool Stock Advisor

Unique Features of Zacks Premium

  • Comprehensive and quantitative: Zacks covers stocks, ETFs, mutual funds, and options in a wide variety of sectors and categories. The service also bases picks on a variety of metrics ranging from growth to value and proprietary ranking.
  • Broad professional recommendations: While services like Motley Fool get recommendations from in-house staff, Zacks receives recommendations from thousands of Wall Street analysts.

Visit Zacks Trade

Unique Features of Morningstar

  • Focus on ETFs: While Morningstar covers various instruments, the service has extensive research on ETFs.
  • Best investment list: The service has a list of the best funds and stocks.
  • Extensive investment coverage: Morningstar covers 620,000+ investments. This makes the service a great resource before making investment decisions.

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Pricing and Plans

Motley Fool Pricing

Motley Fool Stock Advisor is $99 per year for the first year and $199 for subsequent years. This pricing is considerably lower compared to competing services. For instance, The Rule Breakers costs $299 annually. If you subscribe to Rule breakers alongside Stock Advisor that's $498 annually.

If you wish to buy Tom Gardner's Everlasting Stocks Service, it'll cost you $299 yearly. Investment services such as Rule Your Retirement (meant explicitly for those investing for retirement) cost $149 per year.

You need $99 to get started with a Motley Fool paid subscription. However, you still have a 30-day free trial period to decide if you will buy the service or not.

Visit The Motley Fool Stock Advisor

Morningstar Pricing

Morningstar has four main pricing plans. You can pay $29.95 monthly for basic Morningstar Premium membership. Those who decide to pay yearly pay $199. The two- and three-year pricing options offer the best value at $349 and $449, respectively (a 50% and 60% discount, respectively).

Before committing to a paid membership, use the service free-of-charge for two weeks. However, you must add a valid payment card to enjoy the free trial.

The price of both services (Morningstar and Motley Fool) is the same yearly. However, Morningstar is cheaper if you buy a longer-term subscription.

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Zacks Pricing

Zacks pricing plans are the most expensive service on this list. Zacks Premium newsletter costs $249 per year. However, like Motley Fool, the service comes with a 30-day FREE trial. Before committing to a $249 subscription yearly, you have a month to try the service and decide. The $249 gets you recommendations, reports, and rankings.

Advanced investors can enjoy advanced services at a cost. The Investor Collection meant for long-term investing attracts a $495 cost per year or $59 monthly in exchange for features such as real-time buying and selling signals and stock picks under the $10 strategy.

Zacks Ultimate service costs $299 monthly or $2,995 yearly. This service offers everything in basic services plus private picks and market insights from Zacks' portfolio recommendation services. The Ultimate investment approaches are meant to help investors get the best match depending on their investment preferences.

Visit Zacks Trade

Related: The Best Online Discount Brokers

Customer Support

Motley Fool Customer Service

Motley Fool has a DIY customer service. The website has a help center with comprehensive FAQs covering various issues, from account to investment-related issues. Motley Fool also has a community section where subscribers interact freely and comment on a wide range of issues, including recommended stock picks.

There's more. The service has tutorials and live updates during market hours that offer timely news on target companies/investments. Motley Fool also has a knowledge base section on the site that offers important support information, including social media pages, permissions, policies, etc., where subscribers can get more information.

Zacks Customer Service

Zacks has equally good customer support. Customers can reach out anytime between Monday and Friday (9.00 am - 6.00 pm) EST via toll-free phone or email. Zacks has dedicated support for individual services. Customers know exactly who to call as department heads' names and contact information are listed on the site.

Like Motley Fool, Zacks also has an FAQs section that customers can check before calling/contacting support. The service also comes with portfolio management resources such as tutorials for both beginner and advanced investors.

Morningstar Customer Service

Morningstar support is easily accessible on weekdays (Monday to Friday, 7 am-6 pm). Support can deal with technical site problems, questions, or feedback you may have about Morningstar Premium. Premium members can reach support via phone. However, such members must be login to their accounts first.

Morningstar also has a comprehensive FAQs section that covers common questions customers have about the service.

Who Is Each Service Best For?

From the above information, it's clear that different investment research services are built for specific investors. Before you sign up for any service, it's important to ensure it matches your budget, investment goals, and other factors like your investment tool preferences.

Who Is Motley Fool for? Beginner Stock Picking

Motley Fool is for investors keen on stock picking. The service will work great if you are looking to build and wish for a hands-on, semi-active approach to picking individual stocks. While the Motley Fool branding and styling isn't universally appealing, the service has been tested and proven.

Motley Fool is great for beginner investors. A glance at the service reveals a simple layout with a recommended stock list. Ideas are also simplified into easy-to-understand language. Expert investors who enjoy picking their stocks may not find Motley Fool appealing. The same applies to passive investors whose goal is buying and holding diverse funds.

Regarding companies, the service works great for investors keen on investing a majority or all of their investments in next-generation companies.

The service is also great for beginner investors willing to buy and hold stocks for several years (up to 5 years or longer) as Motley Fool focuses on a long-term only strategy. If you are searching for short-term stock gains, Motley Fool isn't for you.

You should also consider Motley Fool if you don't mind upselling. Subscribers should brace themselves for marketing urging them to buy other products or increase their trading balance.

Visit The Motley Fool Stock Advisor

Who is Zacks for? Advanced investor

Zacks is meant for seasoned investors who target short-term gains (less than 3-5 years) and don't mind fundamental analysis. Zacks focuses on stock pics by earning estimates and offers strong buy/sell recommendations. You need to be seasoned to utilize Zacks' strategies effectively.

The service also appeals to advanced investors because it offers to assemble portfolios using Zacks recommendations, reviews, and rankings. Zacks covers numerous investments ranging from ETFs to options and mutual funds. Subscribers get daily portfolio updates and weekly notifications on other Zacks services.

Visit Zacks Trade

Who Is Morningstar Premium for? Seasoned ETF and Mutual Funds Investor

Morningstar is for investors interested in ETFs (Exchange-Traded Funds) and mutual funds in need of general market information. While the service also supports stocks, Morningstar stands out for its fund ratings. Seasoned investors can use the service to get data for supporting an individual investment thesis.

The service can also be used by investors keen on understanding the fundamentals of every investment. Morningstar began reviewing mutual funds exclusively in the 1980s. Stocks were included several years ago. With features like a rating system, Morningstar comes in handy for speeding up its fundamental research. If you don't have the time to conduct your research and don't wish to take on investment research anywhere, consider Morningstar.

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Related: The Best Tools to Research Stocks

Which Is Best? Motley Fool vs. Zacks vs. Morningstar

There is no one-fits-all recommendation. The choice between Motley Fool, Zacks, and Morningstar should be inspired by a person's investment goals. As mentioned above, Motley Fool is the best service for beginner stock picking. Zacks is the best for advanced investors who enjoy fundamental analysis and short investment periods (less than five years). Morningstar is for seasoned investors who are keen on investing in ETFs and mutual funds.

If your investment goal is to build a stock portfolio of ten or more stocks, consider Motley Fool. If you want a broader approach that is more measured than when picking investments on your own, consider Morningstar. If your goal is picking stocks using earnings estimates, Zacks will be the best service for you.

However, you shouldn't restrict yourself to one service. Considering you can use the three services risk-free for two weeks to a month before committing to paying a subscription, you may find two services to work better than one.

Read More: The Best Stock Tracking App

Final Thoughts

Investing can be challenging. While most people have the will to invest, many lack the time and know-how. Investment research services like Motley Fool, Zacks, and Morningstar exist to make investing easier. Some services make it fun and cost-effective. The benefits of using an investment research service outweigh the cost-benefit of DIY investing. Let's not even mention the consequences of investing without facts.

However, some services are better than others in many aspects, including cost. Luckily, we’ve detailed everything you should know about Motley Fool, Zacks, and Morningstar to help you make an informed decision when choosing a research investment service.

While investment research services may seem like unnecessary costs to a seasoned investor, there are ways to enjoy the services at a bargain, i.e., buying long-term plans. You also stand to save time and enjoy the perks of professional investment advisers at a huge discount. Notable cons of investment research services like upselling can be ignored.

Ideally, you should choose one or more services that match your investment goals and budget. You should also utilize free trials before committing to a plan. However, it’s worth noting that investment research services don’t guarantee your performance even if the service has enjoyed a proven performance record.


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