The Landscape of Online Stockbrokers | by Slava Chernoy

Fees, account types, ETFs, Mutual Funds, Stocks, Robo-advising

Slava Chernoy
  • a group of mutual funds as NTF;
  • taxable investment accounts, joint accounts;
  • various types of IRAs: traditional IRA, Roth IRA, Rollover IRA, SEP IRA, SIMPLE IRA;

While most ETFs are offered as NTF (No Transaction Fees), mutual funds may be offered in one of the following forms:

  • TF (Transaction Fee) or NL (No Load) — a transaction fee is charged on each operation: $20–90, depending on the broker. The fees goes to the pocket of the broker.
  • Load — sales fees are charged (1–5%) when purchasing the mutual fund. Usually transaction fee is not charged in this case. The sales charges will go to the mutual fund provider (maybe sales person/broker/provider).

The biggest advantage of Vanguard is wide range of high quality low cost index and actively-managed mutual funds. The main concern related to Vanguard mutual funds is that they usually require high initial contribution: $3,000, target mutual funds require $1,000.

  • Trading platform
  • HSA

529 plan

  • Administration fee: low
  • Expense ratio: low

Managed account:

  • Vanguard Personal Advisor Services®
  • Initial contribution: $50,000 (very high!)
  • Management fee: 0.30%
  • Supported in: taxable, IRAs, trusts
  • personalized advice: (almost all) CFP
  • tax-harvesting: manual
  • tax-coordination: yes
  • Portfolito: Vanguard index and actively managed funds and ETFs
  • Expense ratio: ≈0.08%.

Fidelity competes with Vanguard in the area of mutual funds. It also offers low cost mutual funds. The range of funds is great but not that big as for Vanguard. Actively-managed Fidelity funds are more expensive then Vangurd’s funds, but Fidelity funds does not require high initial contribution.

  • Administration fee: low
  • States: NH, MA, Delaware, Arizona
  • Expense ratio: 0.05–0.59%
  • Offered funds: Fidelity

Managed account

  • Fidelity Go®
  • Initial contribution: $0
  • Management fee: 0.35%
  • Supported in taxable, IRAs
  • tax-harvesting: no
  • tax-coordination: muni in taxable
  • Portfolio: active and index funds Fidelity Flex®
  • Expense ratio: 0%
  • Closing/transferring-out: $0
  • Personalized advice: $25,000
  • Fidelity® Wealth Services: min: $50,000, manual tax-harvesting

Banking

  • FDIC insured: $1.25M
  • APY: 0.57%
  • credit card: 2% cash back

Trading

Schwab also competes with Vanguard (and with Fidelity) in the area of mutual funds. It offers low cost mutual funds. The range of funds is lower than Fidelity’s or Vanguard’s. Schwab mutual funds do not require high initial contribution.

529 plan

Managed Account

  • Schwab Intelligent Portfolios®
  • Management fee: 0%
  • Initial contribution: $5,000
  • Supported in: taxable, IRAs, SEP, trusts, custodial
  • tax-harvesting: yes (from $50,000)
  • tax-coordination: no
  • Portfolio: 20 ETFs: Schwab, Vanguard, iShares,…
  • Closing/transfer-out: $25–50
  • Schwab Intelligent Portfolios Premium: min: $25,000, cost: $300 + $30/month, CFP

Trading

TD-Ameritrade does not produce its own funds, as result, the cheapest mutual funds offered as NTF (No Transaction Fee) have much high expense ratio (0.20%) then the cheapest Vanguard, Fidelity, or Schwab’s funds do.

  • Supported accounts: taxable, IRAs, (Roth) solo-401, 529, ESA, UTMA, custodial, trust
  • HSA: is offered as self-directed (with HSABank)
  • solo-401k: Roth, Roth Conversion, Rollover, loans, etc
  • Closing/transfer-out fee: $75
  • Live-chat

529 Plan

Managed Account

  • Essential Portfolios
  • Initial contribution: $500
  • Management fee: 0.30%
  • Supported in: taxable, IRAs, SEP, trust, custodial, solo-401k, UTMA, 529
  • tax-harvesting: yes
  • personalized advice: no
  • Portfolio: 7–8 ETFs, expense ratio: 0.08–0.20%

Trading

  • thinkorswim
  • Supported instruments: futures, forex
  • Paper trading

E*Trade does not produce investment funds, but it offers Vanguard, Schwab, Invesco mutual funds as NTF (No Transaction Fees).

  • 529, HSA

Managed Account

  • Core Portfolios
  • Initial contribution: $500
  • Management fee: 0.30%
  • Supported in: taxable, IRAs, custodial, UTMA
  • tax-loss harvesting: no
  • tax-coordination: tax-sensitive strategy
  • personalized advice: yes
  • Blend Portfolios: min: $100,000, cost: 0.90%

Banking

  • FDIC insured: $1.25M
  • APY: 1.75%

Trading

Merrill Edge requires Green Card or US citizens. It does not have a lot of mutual funds. Customers of Bank of America are offered VIP services.

  • Closing/transfer fee: $50

529 Plan

Managed account

  • Merrill Guided Investing
  • Initial contribution: $5,000
  • Management fee: 0.30–0.45%.
  • managed by a professional advisor (but not by robo-advising

Trading

  • No transaction fee for funds and options
  • Supported accounts: taxable, IRAs, ESA, UTMA
  • Closing/Transfer fee: $75
  • Trading platform
  • HSA, 529, solo-401k
  • No transaction fee for funds and options
  • Supported accounts: taxable, IRAs
  • Closing/Transfer fee: $75
  • Customer service: 24/7 over email and live-chat.
  • Crypto

WeBull does not offer:

  • Support of fractional shares purchasing
  • DRIP
  • Mutual Funds
  • HSA, 529, solo-401k

Trading

The following financial companies offer robo-advising services

One of the oldest and well known robo-adviser. Probably the only concern is that transferring out the account is not electronic and requires effort and time to be spent.

  • Initial contribution: $0
  • Accounts: taxable, IRAs, trust
  • tax-harvesting: yes
  • tax-coordination: yes
  • Portfolio: 12 ETFs (0.07%-0.17%).
  • Fractional shares: yes
  • Closing/transfer-out: not electronic

Betterment Premium

  • Initial contribution: $100,000
  • Management fee: 0.40%
  • personalized advice: CFP

The main competitor to Betterment. It does not support fractional shares, but it offers 529 plan. The portfolio the robo creates is simpler than of Betterment.

  • Initial contribution: $500
  • Supported accounts: taxable, IRAs, trust, 529
  • tax-harvesting: yes
  • tax-coordination: yes
  • personalized advice: no
  • Portfolio: 6–8 ETFs
  • Expense ratio: 0.06–0.13%
  • Fractional shares: no

VIP

  • Initial contribution: $100,000
  • tax-harvesting: direct indexing
  • Wealthfront Risk Parity Fund (цена: 0.25%)

The best way to define the platform is DYI-robo-adiving or DYI mutual fund managing. M1 offers stocks, ETF, and existing pies to create a portfolio from. Once the portfolio is created, M1 may automatically invest new cash and reinvest dividends in the portfolio. All balancing happens on the portfolio level. No classical DRIP is offered, when dividends are reinvested in the same stock/ETF that paid the dividends.

  • Initial contribution: $0
  • Supported accounts: taxable, IRAs, SEP
  • tax-harvesting: no
  • tax-coordination: no
  • tax minimization: when selling
  • personalized advice: no
  • Portfolio: ETFs
  • fractional shares: yes

Probably, the most simple robo. It does not offer the same set of services as other more well-known robo-advisers. The created portfolio is very simple. Simplicity allows faster start and quicker learning.

  • Initial contribution: $0
  • Supported accounts: taxable, IRAs
  • tax optimization: no
  • personalized advice: no
  • Portfolio: 7 ETFs (iShares, Vanguard).
  • Expense ratio: 0.03%-0.18%
  • Closing/transfer-out: $50 per ETF

The main advantage of Wealthsimple over other robo-advising platforms is that it also supports customers from Canada and GB.

  • Initial contribution: $0
  • Supported accounts: taxable, IRAs, trust
  • personalized advice: yes
  • tax-harvesting: yes

As a platform, offering active-investing, robo-advising, cash-management. Active-investing supports: crypto, fractional shares purchasing, but does not allow to provide beneficiaries. Next, we consider only robo-advising service:

  • Initial contribution: $0
  • Supported accounts: taxable, IRAs
  • tax-harvesting: no
  • personalized advice: CFP
  • Portfolio: ETFs
  • Expense ratio: 0.03–0.08%
  • fractional shares: no

It really depends on what important for particular situation. For example, the following criteria:

  • no closing fees,
  • support of fractional shares
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