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NerdWallet Launches Brokerage Comparison Tool

Oct. 16, 2012
Investing, Investments
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We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners. Here’s how we make money.

This week, NerdWallet launches the Brokerage Comparison Tool, which compares the features and fees of every brokerage account available to investors in the U.S.  Our tool lets users specify their exact trading behavior and returns a customized list of all online brokerage accounts that provide the user’s requested features. Investors can then sort according to whatever aspect is most important to them, whether it be total monthly cost or the minimum initial account balance.

Using the data from our tool, we found that American investors are spending over $1.8 billion annually in unnecessary brokerage fees. What does this mean for the average investor that makes less than two trades per month? Are the fees that significant?

If you make only one stock trade per month, of approximately 100 shares, the following would be your annual fees at the largest 3 brokers:

  • E-trade $119.88
  • TD Ameritrade $119.88
  • Schwab $107.40

However, if you decided to use a deep-discount broker, such as Lightspeed Trader, that would only charge $1 per trade, your total fees per year would equal $12.That’s over $95 a year in savings, for an identical service. NerdWallet also conducted a study of these major brokerages and found that the additional fees are mostly used for advertising and various operating expenses. The only real benefit that you get by paying an extra hundred dollars per year is the peace of mind that comes from having a name brand account.