big 5: Discount brokerages cut prices to get accounts

By: JournalNow Staff | THE ASSOCIATED PRESS
Published: March 14, 2010

NEW YORK

You should be tickled by the talking babies, even if you're sick of E-Trade's ubiquitous TV ads. They show that discount brokerages are competing for your business.

In the past few months, a price war among the biggest brokerages has dropped trade commissions to their lowest levels ever. Fidelity last month slashed its rate to a flat $7.95 a trade, from a sliding scale that ranged from $8 to as much as $19.95. The move came just weeks after Charles Schwab lowered its price to $8.95.

Other costs, such as account maintenance and inactivity fees, have been largely wiped away by competition, too. And prices can be even lower at smaller brokerages, where you may also find some special features.

The only downside to all the choices? Deciding which fits you best.

The Big 5: More Than Trading

It's natural to start your search with names you recognize. The five largest discount brokerages based on customer assets are Charles Schwab, E-Trade, Fidelity, Scottrade and TD Ameritrade, according to the Aite Group. Those companies also happen to be good places to get financial services beyond trading.

Just which features you'll find depends on the brokerage, however.

For example, if you want to consolidate all your accounts in one place, take a look at E-Trade and Schwab. Both offer banking products such as checking and savings accounts, in addition to standard brokerage services.

Or you might value having a branch office nearby where you can get live help. If that's a priority, check the company's Web site to see if there's a location near you.

If a concern is saving for retirement and finding a good mutual fund, Fidelity offers nearly 4,000 no-load funds while Scottrade offers nearly 3,000. No-load funds don't charge an upfront sales fee, but may include other fees.

If the ability to analyze investments is a selling point for you, Fidelity says it provides the most independent research reports of any of the big five.

Once you have a better idea of which brokerages suit you, check out the basic pricing below. Even if one has a lower trade commission, you might not like the other terms. For example, Fidelity and Schwab provide free paper statements, but the other three charge $2 a statement. And there's often a fee to close an account or even transfer a portion of your money out.