There are five major stock brokerage houses in the United States, often referred to as the “big five brokerages.” Each of these firms, Scottrade, Charles Schwab, Fidelity Investments, E-Trade and TD Ameritrade, comprise the top five in terms of customers and assets.
Scottrade is a privately owned retail brokerage and is often classified as a “discount brokerage.” According to the company’s March 31, 2015 financial statements, Scottrade held net capital of $330,116,869.
The company was established in 1980 to provide services to self-directed investors. In 2015, it is based out of St. Louis, Missouri, and has 500 branch offices in the U.S. Scottrade uses an FDIC-insured bank to offer checking and savings accounts; it offers these accounts free to any client with at least $500 in a Scottrade brokerage account. Total assets for the Scottrade Bank exceeds $17.7 billion.
As of October 2015, Scottrade reported having 3.1 million active customers. All of these customers, plus an additional 1.5 million with active accounts before February 2014, had personal information exposed through a data hack.
In operation for more than 40 years, Charles Schwab (NYSE: SCHW) is a leading investment brokerage and IRA custodian firm in the U.S. It was the first real discount brokerage, although there are cheaper alternatives available in 2015.
Charles Schwab entered 2015 with more than 9 million brokerage accounts and just shy of $2.5 trillion in net client assets under management (AUM). The firm added an average of 80,000-plus gross accounts every month in 2014, making it one of the fastest-growing brokerage houses in the world. Like with Scottrade, Schwab customers can open checking accounts with their brokerage accounts.
Fidelity is the nation’s largest keeper of 401(k) retirement savings plans and the largest provider of 403(b) plans for nonprofits. Through its mutual funds and other advisory services, Fidelity has tens of millions of nonbrokerage customers, something the other “big five” companies cannot claim.
As of Q2 2015, Fidelity had 71.8 million total customer accounts, 21.7 million of which were brokerage accounts. There are more than 140 investor centers in the U.S. where customers can manage or seek advice for their trades.
Fidelity is the best choice for brokerage clients who also want to invest in Fidelity ETFs and mutual funds, there are more than 430 Fidelity funds, since the firm offers discounts and commission-free transactions for Fidelity products. Otherwise, there are probably cheaper and more intuitive platforms out there.
Founded in Palo Alto, the heart of the American technology sector, in 1982, E-Trade (NASDAQ: ETFC) began as a holding company and has transformed into a leading online discount brokerage service. The company was hit hard during the 2007-2008 financial crisis because of high exposure to subprime mortgage portfolios. Its stock dropped 86.7% in 2007 before the company implemented a “comprehensive turnaround plan.”
The turnaround worked, and E-Trade is a leading financial firm when it comes to mobile accessibility, online trading tools and a customizable user experience. The firm also offers two checking accounts and mortgages. Total assets for clients, brokerage and banking accounts combined were up to $294 billion by year-end 2014, up from $254 billion the prior year.
TD Ameritrade Holding Corp. (NYSE: AMTD), in operation for more than 35 years, hit its stride in Q2 2015 and set a record with $695 billion in client assets. This represented a 13% year-over-year increase and came on the heels of five consecutive quarters of at least $12 billion in net new assets.
The Omaha-based firm became TD Ameritrade after the old Ameritrade acquired TD Waterhouse USA from TD Bank Financial Group. Under the StockBrokers.com Online Broker Review for Best in Class awards, TD Ameritrade finished second overall in 2011, first in 2012, first in 2013 and first once again in 2014.