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,
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.
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
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
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
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
in his survey. "I know this is pretty standard now in the industry, but I still think it's weak."
Over in League A, low-scoring
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
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.
"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.
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.
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.
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."
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."
Leading the pack with only a middling score is
, a unit of
Donaldson Lufkin & Jenrette
. Its growing market and company news selection includes
Interactive Data Corp.
stock reports and
came in second. It offers things like S&P stock reports, analyst picks, upgrades and downgrades, information on institutional ownership,
The Industry Standard's
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
"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 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.
Informative provided the technology to conduct this survey.