Online Brokers 2000: How They Stack Up on Complex Trades, Commissions, Real-Time Market and Company News

Online traders may demand more from their brokers than they do from their spouses.

Our respondents ranked not one, not two, but nine features of online brokers as above average in importance when choosing an online broker. When it comes to individual relationships with brokers, everybody is high-maintenance. The two most important features, reliability and real-time quotes, are given special treatment. In a separate story, we examined the next four most important categories. In this piece, we look at the categories of complex trades, commissions and real-time market and company news. Plus, we throw in a word or two on options.

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Throughout, we discuss performance by both our League A brokers, the ones who received more than 650 votes, and our League B brokers, who received plenty of votes, between 72 and 312, though the results from this pool don't have quite the same heft as League A. While both sample sizes were hefty enough to report upon, we have a hair more confidence in our League A results. (For more on our methodology, see our separate story.)

Complex Trades

In a market where fast-moving stocks and unexpected price jumps are the norm, traders appreciate the value of implementing fast and easy stop and limit orders.

League A players Datek and Charles Schwab(SCH Quote) received the best marks. Datek was the only broker to receive an average score of "good." It wants its site to be fast and easy to use and its trading interface simple. Apparently, it succeeds. Both Schwab and League B leader Dreyfus have a similar focus.

Neither Schwab, Datek nor Dreyfus charges more for stop or limit orders than market orders, but the fact that many brokers do frustrates customers across the board. "The most annoying thing I run into is the $5 fee for limit/stop orders," said Mike Janzen in his survey. "I know this is pretty standard now in the industry, but I still think it's weak."

Broker Score 1. Datek 20.38 2. Schwab 19.71 3. DLJdirect 18.96 4. Fidelity 18.76 5. E*Trade 18.55 6. Ameritrade 17.98 7. TD Waterhouse 14.56 Scale of 0 to 30. League A brokers received more than 650 votes each. League B brokers received between 72 and 312.

Over in League A, low-scoring TD Waterhouse(TWE Quote) again claims to be working on handling complex orders better. "It's on our radar screen," says John Chatal, executive vice president of TD Waterhouse Group. The broker plans improvements in April. Customers won't see a difference on the page, but the orders will be dealt with in a more automated fashion.

League B broker American Express(AXP Quote) ranked lowest on complex trades, achieving a score near the bottom of "average." Because its online trading service is relatively new, customers might expect things to get better. But complex trades aren't on the broker's fix-it list. It figures its stop- and limit-order entry is already pretty easy and is satisfied with its order processing.

Broker Score 1. Dreyfus 19.62 2. Brown & Co. 18.70 3. ScoTTrade 17.80 4. MSDW 17.66 5. NDB 17.57 6. Vanguard 16.40 7. Suretrade 16.01 8. Quick & Reilly 15.70 9. Merrill Lynch 15.27 10. AmEx 12.50 Scale of 0 to 30. League A brokers received more than 650 votes each. League B brokers received between 72 and 312.

Low Commissions

"You get what you pay for" isn't a philosophy that online investors accept. Even when they're satisfied with the service, they still want good prices.

It's no surprise that Brown & Co., a Chase Manhattan(CMB Quote) subsidiary and League B broker, ranks first with its $5 market orders up to 5,000 shares. (Limit orders on 5,000 shares are $10.) Its score -- an average mark closer to "excellent" than any broker in any category -- makes Brown a winner on commissions.

Broker Score 1. Datek 24.62 2. Ameritrade 23.97 3. TD Waterhouse 19.38 4. Fidelity 15.52 5. E*Trade 13.90 6. DLJdirect 11.88 7. Schwab 8.44 Scale of 0 to 30. League A brokers received more than 650 votes each. League B brokers received between 72 and 312.

Those low fees aren't open to just anybody. George Brown doesn't want to deal with amateurs. Customers need to have five years of investing experience, a net income of at least $40,000 and at least $15,000 in the account.

Few-frills Suretrade, a FleetBoston(FBF Quote) unit, also ranks high for its $7.95 market orders, which it trumpets on its home page. That price goes for shares over $2, while limit orders cost $9.95. Topping League A is Datek, charging just $9.99 for any order up to 5,000 shares. American Express offers an even better price for traders with more than $100,000 in their accounts -- trades are free unless shares are sold within 24 hours of buying.

Despite respondents' overall satisfaction with Schwab, readers still find the comparatively hefty commissions irksome. Schwab's score falls into the "poor" category. "It's important Schwab remains competitive on pricing," said one respondent. "I spent more than $14,000 in commissions last year; however, the recent change in the commission structure is most welcome."

Broker Score 1. Brown & Co. 27.87 2. Suretrade 25.49 3. ScoTTrade 25.38 4. AmEx 24.44 5. Dreyfus 19.87 6. NDB 16.54 7. Merrill Lynch 13.30 8. Quick & Reilly 13.30 9. Vanguard 12.67 10. MSDW 9.97 Scale of 0 to 30. League A brokers received more than 650 votes each. League B brokers received between 72 and 312.

What is that change exactly? At the regular price of $29.95 for a trade of as many as 1,000 shares, Schwab charges more than the other League A brokers. But in February, it announced discounts for very active traders. More than 30 stock trades per quarter drops the price to $19.95, and more than 60 trades per quarter reduces it to $14.95 per trade. For trades of more than 1,000 shares, Schwab also cuts the additional fee per share. That fee is regularly 3 cents a share for the total order. It drops to 2 cents for the over-30 trade category and 1 cent for the over-60 trade group.

Real-Time Market and Company News

It's hard to invest in a vacuum, and online traders seek investing information like Jennifer Lopez seeks publicity. Unfortunately, the respondents aren't doing as well as Tabloid Jenny. They didn't give a single broker an average score of "good."

Broker Score 1. DLJdirect 16.73 2. E*Trade 15.42 3. Schwab 14.55 4. Datek 13.06 5. Fidelity 13.02 6. Ameritrade 12.04 7. TD Waterhouse 10.57 Scale of 0 to 30. League A brokers received more than 650 votes each. League B brokers received between 72 and 312.

Leading the pack with only a middling score is DLJdirect (DIR Quote), a unit of Donaldson Lufkin & Jenrette(DLJ Quote). Its growing market and company news selection includes Zacks, Thomson, Briefing.com, Reuters, TheStreet.com, Interactive Data Corp., S&P stock reports and Marketscope. E*Trade (EGRP Quote) came in second. It offers things like S&P stock reports, analyst picks, upgrades and downgrades, information on institutional ownership, The Industry Standard's Daily Insider and TheStreet.com.

At the other end of the disappointing range of scores is League B's Brown & Co. Under the dubious title of research, it offers links that take customers away from its site to sites such as CBS MarketWatch, Quicken.com, Yahoo! Finance and TheStreet.com.

Broker Score 1. Merrill Lynch 13.57 2. MSDW 13.30 3. Suretrade 11.97 4. Dreyfus 11.67 5. NDB 11.50 6. Quick & Reilly 11.00 7. AmEx 10.14 8. ScoTTrade 7.73 8. Vanguard 6.40 9. Brown & Co. 2.72 Scale of 0 to 30. League A brokers received more than 650 votes each. League B brokers received between 72 and 312.

"Our philosophy has been the same for a long period of time -- we feel like our customers are savvy investors who are able to get the same information elsewhere," said Bo Davies, Brown & Co.'s co-president and co-CEO. Davies said that there will be content upgrades to the site in the third quarter, but didn't elaborate.

Options Trading

Options trading isn't just for daytraders, and investors have come to expect put orders to be as simple as market orders.

Datek has long been planning to get into options. That's now scheduled for the second quarter. "We know that's one of the things we've been slow in getting out," said Datek spokesman Michael Dunn. "It's our No. 1 project right now. We have a couple of innovations we hope to bring to that area."

League B leader Dreyfus tops the category, with the closest score to "good" of any broker. "We've always been very, very sophisticated in terms of options," says Jeffrey Nachman, chief executive of Dreyfus Brokerage Services. The broker can do most options orders online and believes it has the best online list of options and option prices for any given stock.