Our brokerage rating methodology (2024)

How we rate brokerages

For our brokerage account evaluations, we considered various trading factors. These include investment options, such as stocks, exchange-traded funds, options and futures.

We also looked at the types of brokerages that cater to different trading profiles. For example, beginners may need more customer service support or educational resources. So brokerages that address these needs are ranked higher.

Other investors, such as those who want to trade options or futures, may have different needs. That’s why we have separate rankings for the best brokerages for options, the best brokerages for day traders and the best brokerages for futures.

How we choose the best products

The first step in ranking brokerages is identifying the leading financial institutions. From there, we ranked the brokerages based on various attributes.

We also reviewed the cost of these trades. For example, a top brokerage for penny stocks would ideally have commission-free trading for stocks and ETFs and relatively inexpensive OTC stock trades.

How many companies we reviewed

We created a shortlist of up to 20 leading financial institutions that offer brokerage accounts. We then rated and ranked these brokerage accounts based on various features and investing profiles.

To better understand each company’s products and services, we researched more than 50 questions per institution. This painted a broader picture of each company’s profile and the features available with a particular brokerage account. The 50 questions included queries on account minimums, services and costs.

How we collect data

We execute a manual process for our data collection on ranking products, such as the best brokerage firms.

Our expert team of researchers goes to each product page and gathers every piece of information. When we can’t find all the information, we contact the companies directly via email or phone.

The data collected has a half-life of either three months or six months. So our data is then refreshed and reviewed on either a quarterly or semiannual basis. Adjustments to the rankings are made accordingly at these times.

How many hours we spend reviewing

From research to analysis, projects that rank investment products take at least 60 hours.

An additional 12 hours may be spent fact-checking responses in the quality assurance phase. There are multiple stages of QA. For a more significant project, there are three stages. The first two QA stages take three or four hours each. The third stage of quality assurance is also around three or four hours.

Star rating scoring

The scoring is based on a scale of one to five, with the best company receiving five stars. Ratings are used to rank products and determine the best.

Methodology

The brokerages that made our list excelled across nine categories. Each category corresponds to a critical feature that virtually all brokerages could be benchmarked against.

We developed subcategories for a more granular evaluation of a brokerage platform’s capabilities. The scoring for these subcategories varied depending on their nature and the data collected. Some were binary labels, such as “yes” or “no” for features offered. Others were numeric values, such as commissions charged by brokers.

Finally, the weightings for the categories and subcategories were changed for each ranking product. This reflects the varying needs and objectives of different types of investors.

Advisory services

This category assessed whether brokerages could meet the wealth management needs of non-self-directed investors.

It consisted of three subcategories:

Robo-advisory services.
Cash management services.
Live advisory services.

Education and research

Reputable, up-to-date and relevant financial education provides a more seamless and trustworthy experience.

This category is comprised of three subcategories:

Webinars.
In-house research.
Third-party research.

Insurance

Investors who entrust their money to a brokerage firm want assurance that their money is safe. This means looking for firms that are backed up by robust insurance policies with coverage beyond regulatory minimums.

This category had four subcategories:

Federal Deposit Insurance Corp. protection.
Securities Investor Protection Corp. protection.
Additional asset protection.
Additional asset protection dollar amount.

Features

Investing is an information game. It’s much easier to achieve success when your brokerage has tools and features to help you gain an edge.

Some tools automate the more time-consuming and complex aspects of screening stocks or rebalancing portfolios. Others allow you to trade more nimbly or uncover new ideas.

This category consisted of six subcategories:

Price alerts.
Portfolio builders.
Paper trading simulators.
Screeners.
Extended trading hours.
Trading idea generators.

Investment offerings

Variety is the spice of life. Investing is no different. Access to various securities gives investors greater flexibility when managing risk or putting an investment thesis into play.

Trading costs

One easy way to maximize your net returns is by paying minimal fees. While brokers must make money somehow, the best ones keep trading costs low.

This category had nine subcategories:

Stock commission fees.
ETF commission fees.
Options commission fees.
Options fee per contact.
Futures commission open fees.
Futures commission close fees.
OTC stock fees.
OTC stock minimum trade requirements.
Broker-assisted trade fees.

Fees and account minimums

Getting nickel-and-dimed by your brokerage is never a good feeling. Beyond direct trading commissions, hidden costs like account opening and closing fees, administrative fees, and funding or transfer fees can affect your overall returns. For a new investor with a smaller account, a minimum balance requirement can also be an unwelcome barrier to entry.

This category consisted of six subcategories:

New account bonuses.
Inactivity fees.
Account closure fees.
Account transfer fees.
Domestic wire fees.
Bank card deposits.

Margin interest and interest on idle cash

Cash is a risk-free asset. In today’s high interest rate environment, it earns a competitive rate of return. This especially benefits advanced traders and investors who often hold large cash balances for collateral or risk management.

This category is comprised of two subcategories:

Whether interest is paid on idle cash.
Interest rate on idle cash.

Customer service

You should be able to get timely assistance from your broker. It should come in a format and be available at an hour convenient to you. Prompt, dedicated and reliable customer service can make or break your investing experience.

This category had four subcategories:

24/7 support.
Phone support.
Email support.
Online chat support.

Best online brokers and trading platforms

Here’s the list of factors and weightings for our best online brokers and trading platforms ranking:

Trading costs: 20%.
Education and research: 13.5%.
Customer service: 12%.
Advisory services: 10%.
Insurance: 10%.
Fees and account minimums: 10%.
Features: 9%.
Investment offerings: 9%.
Margin interest rate and interest on idle cash: 6.5%.

We took a bird’s-eye view of the various factors to score the best online brokers and trading platforms. We assigned the most weight to categories that affected many types of investors. These include trading costs, education and research, and customer service.

To learn more about why these factors are crucial for your trading success, check out the best online brokers and trading platforms.

Best online brokers for beginners

Here’s the list of factors and weightings for our best brokers for beginners ranking:

Trading costs: 23%.
Customer service: 16%.
Education and research: 15%.
Fees and account minimums: 12%.
Advisory services: 9%.
Features: 9%.
Investment offerings: 9%.
Insurance: 5%.
Margin interest rate and interest on idle cash: 2%.

Trading costs, customer service, and education and research are especially important for beginners. Novice investors shouldn’t be overwhelmed by high fees or steep minimums. They also need reliable guidance to navigate the trading experience. And if things go wrong, being able to talk to a human matters.

If you’re a newbie, read our roundup of the best online brokers for beginners.

Best brokers for day trading

Here’s the list of factors and weightings for our best brokers for day trading ranking:

Trading costs: 30%.
Features: 24%.
Investment offerings: 9%.
Fees and account minimums: 8%.
Customer service: 8%.
Advisory services: 6%.
Education and research: 6%.
Margin interest rate and interest on idle cash: 5%.
Insurance: 4%.

Day trading is about agility and precision. So features were weighted heavily. Because day trading involves high-volume trading, low trading costs are crucial. In exchange, we placed less emphasis on advisory services, education and research.

If you want to hit the virtual trading floor with confidence, look at our list of the best brokers for day trading.

Best brokers for penny stocks

Here’s the list of factors and weightings for our best brokers for penny stocks ranking:

Features: 30%.
Trading costs: 27%.
Insurance: 10%.
Fees and account minimums: 10%.
Advisory services: 6%.
Education and research: 6%.
Customer service: 6%.
Margin interest rate and interest on idle cash: 5%.

Penny stocks are known for their volatility and high return potential. They have substantial risk due to the less stringent reporting requirements and opaque nature of many companies that trade over the counter. This asymmetry in information can create opportunities. But to leverage these opportunities, you need tools. That’s why we weighted the features category heavily. Given the unique cost structure of trading penny stocks, we also emphasized trading costs.

Ready to explore the high-risk, high-reward world of penny stocks? See our top picks for the best brokers for penny stocks.

Best online brokers for options

Here’s the list of factors and weightings for our best brokers for options ranking:

Features: 30%.
Trading costs: 25.5%.
Insurance: 10%.
Margin interest rate and interest on idle cash: 10%.
Fees and account minimums: 8%.
Education and research: 6%.
Customer service: 6%.
Advisory services: 4.5%.

Given the active nature of options trading, a brokerage platform’s features are crucial. Trading costs are also significant, as options trading often involves frequent transactions. Some options strategies, such as writing cash-secured puts, may result in cash balances. So we placed greater emphasis on the interest rates on idle cash to benefit traders who utilize these strategies.

View the best online brokers for options to see which brokerages excel at catering to the sophisticated needs of options traders.

Best brokers for futures

Here’s the list of factors and weightings for our best brokers for futures ranking:

Features: 30%.
Trading costs: 28%.
Insurance: 8%.
Fees and account minimums: 8%.
Margin interest rate and interest on idle cash: 8%.
Advisory services: 6%.
Education and research: 6%.
Customer service: 6%.

For futures trading, features are crucial for effective strategy execution and risk management. Trading costs are another critical aspect. That’s because futures trading typically involves opening and closing fees. We also highlighted the importance of competitive interest rates on idle cash. They can provide a small but significant return on the uninvested capital that often accompanies futures trading strategies utilizing margin.

Ready to take control of your futures trading with a platform that matches your need for speed and efficiency? Explore our picks for the best brokers for futures.

USA TODAY Blueprint’s editorial standards

Every article is fact-checked by our writers and editors along with our data team to ensure we have the most accurate and up-to-date information. We use a data-driven methodology based on what investors value most to determine each rating.

We pride ourselves on our journalistic integrity. Our goal is to empower our readers to make sound financial decisions. Advertisers do not influence our content, opinions or evaluations.