Brokerages Rating Methodology

Choosing a brokerage firm is a major financial decision. The MarketWatch Guides team researched 35 of the top brokerages in the country (see the full list below), including full-service and online-only options, analyzing over 3,000 data points. We selected brokerages based on expert recommendations, top industry reviews and market impact. We regularly monitor each brokerage’s offerings, customer service, fees and regulatory standings to inform our rating system and help consumers choose investing partners.

Our Rating System for Brokerages

To create our rating system, we looked at brokerages’ risk factors, investment and fee disclosures, state registration information and company websites to understand their investment terms and options. We also considered each company’s trading platform, data-security measures and educational tools to help investors understand how user-friendly firms are.

To understand each company’s standing in the industry, we looked at its registration status with the U.S. Securities and Exchange Commission and its membership with the Financial Industry Regulatory Authority, an organization that regulates broker-dealers to help protect investors.

We focused on five key categories for our ratings to reflect a mix of what real investors we surveyed said was most important to them and what we’ve seen matters in the long run based on industry experience.

We regularly monitor brokerage data to ensure our rankings and provider information are up to date.

Factors We Use To Score Brokerages

Our scores are based on a 100-point rating system that is converted to a 5-star scale. We weigh factors that can vary more between brokerages — such as trustworthiness and investment options — more heavily. We also give more weight to factors that can impact your ability to invest securely and broadly. Below, we give more information on each rating category’s data points and measures.

Trustworthiness (25%)

This category covers the broker’s legal standing, transparency and commitment to secure and ethical practices. We considered the following factors:

• Regulatory standings: We looked at a brokerage’s standing with investing regulatory agencies. This includes its SEC registration status, FINRA membership, and its insurance coverage with the Securities Investor Protection Corp. and the Federal Deposit Insurance Corp. or National Credit Union Administration (when applicable).
• Better Business Bureau standing: We checked the BBB’s letter grade, customer review score and customer complaints. The highest-ranked companies have high letter grades and review scores and few, if any, alerts indicating potential customer issues or outstanding lawsuits.

Investment Offerings (25%)

The highest-ranked brokerages offer a range of investment accounts and asset types. In this category, we considered:

• Number of account types available: Brokerages that offer a range of investment types, such as taxable, 401(k), individual retirement and custodial accounts, scored the highest.
• Types of investments available: The best-ranked brokerages offer a variety of investments, including stocks, exchange-traded funds, mutual funds, bonds, options and cryptocurrencies.
• Self-directed, managed portfolio and fractional shares: Brokerages scored points for offering self-directed investments, managed portfolios and fractional shares.

Customer Support and Tools (20%)

Because so many brokerages are automated and online, we assessed the availability and helpfulness of a firm’s human and automated customer service resources, as well as its tools for client education and analysis. We considered these factors:

• Customer service support: Our highest-ranked brokerages offer 24/7 phone and chat support, as well as in-branch, in-app and email support.
• Personal and robo-advisers: Brokers received points for the availability of individual or robo-advisers (or both).
• Educational support: Brokerages with ample educational resources, such as videos, blogs and courses, scored the highest here. The best platforms also provide resources for reviewing economic data releases to help investors make informed decisions based on market conditions.
• Tools: We examined tools such as screeners, indices, breaking-news alerts, market reports and the ability to create customized portfolios to make trading easier.

Pricing (20%)

A key component of a brokerage is the level of its fees and commissions. Our pricing category covered two main affordability factors:

• Fees: Fees cut into your investment returns, so they’re essential in determining how affordable a firm is. We evaluated each brokerage’s fees for robo-advisers and self-directed portfolio management separately. We also considered trading commissions and fees for things such as minimum activity, options, tax-loss harvesting and outgoing automated customer account transfers. Our highest-ranked brokerages charge minimal management and trading fees.
• Minimum investment requirements: The minimum investment amounts affect an investment’s accessibility, so our highest-ranked brokerages don’t require minimum investments.

Platform Experience (10%)

With this category, we evaluated the quality, usability and performance of a brokerage’s web and mobile interfaces, since a better platform experience affects your overall investing experience. Here’s what we rated:

• User experience: We looked at highlights and complaints from customer reviews of a brokerage’s platforms. Our highest-scored companies received few complaints and multiple positive highlights of their platforms.
• Mobile app and ratings: We consider the number of ratings and the overall score in both the Apple App Store and Google Play store.
• Two-factor authentication: Brokerages with two-factor authentication rank the highest.

The Bottom Line: How To Choose the Right Brokerage

Our rating system and brokerage reviews are designed to help you make an informed decision about a brokerage firm. We collect data on each company’s pricing, investment offerings, trustworthiness, customer experience and platform experience to examine each institution and help you weigh whether it fits your needs. Many successful investors also evaluate brokerages based on their tools for checking pre-market movements and after-hours trading capabilities.

However, the highest-rated brokerages on our list may not always make the most sense for you. Every person’s financial situation is different, and our reviews are not recommendations to buy or sell any financial product or service. Before choosing a brokerage or investing in its products, it’s a good idea to speak to a licensed financial adviser, such as a certified financial planner, to help review your options.

*Data accurate at time of publication.

**Disclaimer: Our reviews are for informational purposes only and are not recommendations to buy or sell any financial product or use any financial service. While we strive to keep our content up to date, information including fees and investment options may change without notice. Please consult each provider’s website for the most recent details.