Ratings Methodology for Brokers

NerdWallet’s overall ratings for brokers are weighted averages of ratings in the following larger categories:
  • Account minimum.
  • Investment selection.
  • Trading platform.
  • Customer support.
  • Account fees.
  • Trading costs.
  • Mobile app.
  • Data collection and review process

    NerdWallet currently reviews 16 online brokerages that offer self-directed accounts. These brokerages constitute the majority of the brokerage market based on their assets under management.

    We collect data from providers and observe provider demonstrations as necessary. Our process starts by sending detailed questionnaires to providers. The questionnaires are structured to equally elicit both favorable and unfavorable responses. They are not designed or prepared to produce any predetermined results. The questionnaire answers, combined with product demonstrations, interviews of provider personnel and hands-on research by our specialists, make up our proprietary assessment process that scores each provider’s performance across more than 20 factors.

    The final output produces star ratings from poor (1 star) to excellent (5 stars). Ratings are rounded to the nearest half-star.

    Information updates

    Our writers and editors conduct broker reviews on an annual basis. Throughout the year, we maintain contact with providers and update any changes to their offerings.

    Factor weightings

    The weighting of each rating factor is based on our team’s assessment of which features are most important to consumers and which ones impact the consumer experience in the most meaningful way. Those factors vary depending on the category.

    The review team

    The review team comprises seasoned writers, researchers and editors who cover stocks, bonds, mutual funds, index funds, exchange-traded funds, alternative investments, socially responsible investing, financial advisors, retirement, and investment strategy. In addition to appearing on NerdWallet, the work of our team members has been published in The New York Times, The Washington Post, Forbes, USA Today, Bloomberg News, Nasdaq, MSN, MarketWatch, Yahoo Finance and other national and regional media outlets. Each writer and editor follows NerdWallet’s strict guidelines for editorial integrity.

    The combined expertise of our investing team is infused into our review process to ensure thoughtful evaluation of products and services from the customer perspective. Our writers and editors together have more than 70 years of experience in writing about finance. Their former positions range from Wall Street Journal reporter to senior financial advisor at Merrill Lynch.

    Account minimum

    We considered whether providers require an account minimum (the lowest dollar amount you can open an account with) and if so, how much the minimum is. A $0 account minimum earns the highest rating, which is 5 stars, and an account minimum of $2,500 or higher earns the lowest rating, 1 star.

    Investment selection

    This category takes into account the following from each provider:

  • Tradable securities: If a provider offers stocks, mutual funds, ETFs, bonds, options, futures and forex, they earn the highest score (5 stars) in that subcategory. If a provider doesn’t offer at least stocks, mutual funds, ETFs and bonds, it earns the lowest score.
  • Number of no-transaction-fee mutual funds: If a provider offers more than 4,000 no-transaction-fee mutual funds, it earns the highest score. If it offers none, it earns the lowest score.
  • Availability of fractional shares: If a provider offers fractional shares, it earns the highest score. If a provider does not offer fractional shares, it earns the lowest score.
  • Cryptocurrency offering: If a provider offers cryptocurrencies, or cryptocurrencies and crypto-related products, it earns the highest score. If a provider offers none, it earns the lowest score. Providers that offer access to coin trusts or crypto derivatives earn two stars.
  • Trading platform

    We consider how many features each provider offers customers. If a provider offers advanced analysis and screening tools, technical indicators and studies for charting, and a large variety of streaming news and research free to all customers, it earns the highest score. If it offers no trading platform, it earns the lowest score.

    Customer support

    This category takes into account the following from each provider:

  • Customer service availability: If a provider has 24/7 phone support, it earns the highest rating. If it has no phone support, it earns the lowest rating.
  • Broker-assisted trades: If a provider offers broker-assisted trades for less than $20, it earns the highest rating. If it charges more than $35, it earns the lowest rating.
  • Website usability: We define website usability as how easy it is for our reviewers to find key details on the site. If we can find all information in under five minutes, a provider earns the highest rating. If we can’t find any information, the provider earns the lowest rating.
  • Educational support: If a provider offers quality educational resources, such as free online seminars or live events at local branches, it earns the highest score. If there are no online educational resources, it earns the lowest score.
  • Account fees

    This category analyzes the following:

  • ACAT partial transfer fees, annual fees and inactivity fees: If a provider does not charge these fees, it earns the highest rating. Fees of $75 or more earn the lowest rating. ACAT transfers allow customers to transfer assets to a different brokerage firm without liquidating them.
  • Account closing (ACAT full transfer) fee: If a provider charges no fee to close an account and transfer out assets, it earns the highest rating. If a provider charges more than $100, it earns the lowest rating.
  • Trading costs

    This category considers:

  • Stock trading costs: If a provider charges no fee to trade stocks, it earns the highest rating. If a provider charges more than $5, it earns the lowest rating.
  • Options trading costs: If a provider charges less than 50 cents per contract to trade options, it earns the highest rating. If a provider charges more than $1, it earns the lowest rating.

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