26 BARRON’S March1,2021
charged bull run. And the year saw
unprecedented growth in new ac-
counts from individual investors at
the full-service online brokerage plat-
forms that make upBarron’s26th an-
nual Best Online Brokers Survey.
This flood of new investors also
produced some drama more recently.
In late January, the shares of struggling
videogame retailerGameStop(ticker:
GME), whipped up on an online
message board at Reddit called r/Wall-
StreetBets, erupted. Suddenly, nearly
everyone was opining on covered calls,
short squeezes, meme trading, and the
rapidly rising, then plummeting, prices
of a group of beaten-down stocks.
This became known as the “Robin-
hood phenomenon,” a nod to a trading
app used by 13 million millennials and
Gen Zers, which stirred controversy,
not to say litigation and regulatory
scrutiny, after it was forced to restrict
trading at the height of the mania.
Robinhood, founded in 2013, had pop-
ularized fractional shares and zero-
dollar commissions on an app and
website featuring swipe-to-trade ease.
The frenzy around GameStop high-
lighted how far individual investors
had come in terms of numbers, influ-
ence, and strength—a trend that few
had anticipated before Covid arrived.
The numbers are big. By the end
of its fiscal year on Sept. 30, 2020, TD
Ameritrade’s daily average trading
volume had risen four times from the
volume traded at the beginning of that
fiscal year. The number of retail bro-
kerage accounts atInteractive Bro-
kers Group(IBKR) grew by 56% in
2020, while tastytrade’s smaller client
base almost doubled. Fidelity added
more than three million clients, giving
it 26.5 million accounts by year end.
“In the past, generally, people felt
that retail investors didn’t have that
much of an impact on the market-
place, that it was controlled 100% by
institutional players, and there was
some truth to that,” says Christopher
Larkin, E*Trade’s managing director
for digital brokerage product. “But
you’ve seen over the past year that
retail has had a meaningful impact
on market movements.”
Robinhood and other financial-
technology apps such as Webull and
Moomoo have never been part of the
Online Broker Survey, an issue we’ve
aired over the past few years. Our
focus has always been on brokers that
cater to a wide range of investors and
offer a broad array of services and
sophisticated analytical and research
capabilities besides trade execution.
That’s reflected in our survey, which
has 76 separate questions, six catego-
ries, and 98 subcategories. We con-
duct remote interviews, and the firms
demo their platforms for us, often
responding with written answers to
questions. And we independently put
the platforms through their paces.
This year, we decided to see how
Robinhood would fare against the full-
service brokerages. Robinhood trailed
the field, though it wasn’t a complete
wipeout. Robinhood is easy to use,
offers the ability to trade equities, some
options, and cryptocurrencies, and has
a clean, attractive design. The down-
side: It lacks thepanoply of services
and on-site resources of the full-service
brokers. (To delve more deeply into the
details of individual brokerages, in-
cluding Robinhood, turn to page 28.)
“Part wizard,
part content
curation.”
TD Ameritrade’s
Bob Leavitt, on its
education offerings
The Best Online Brokers in a
Year Ruled by the Individual
In a pandemic year, investors flocked to stocks, signing up in the millions for trading apps like Robinhood or to full-service
brokerage platforms. In our ranking of the best online brokers, Interactive Brokers narrowly beat out Fidelity for the top spot.
T
he past year has been
extraordinary by any mea-
sure. The stock market
experienced whipsawing
volatility and rising prices.
The Covid-19 lockdowns,
zero-interest rates, stimu-
lus checks, lack of sports, and appar-
ently sheer boredom fed a super-
By MATT MILLER
Illustration by Josh Holinaty