Attractive margin rates and new portfolio management features are crucial tools for investors, and Interactive Brokers excelled in both areas in Investor's Business Daily's ninth annual Best Online Brokers survey.
Industry-low margin rates and new tools like the Impact Dashboard helped Interactive Brokers maintain another top five finish in Overall Customer Experience in IBD's latest Best Online Brokers survey. The survey results can help investors see if Interactive Brokers is a good fit for them.
Interactive Brokers has ranked in the top five overall in each of the past six years.
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Get Details On The Survey Methodology
The awards are strictly based on customers' ratings. For the survey, IBD partnered with polling firm TechnoMetrica Market Intelligence to ask more than 5,000 investors to rate their primary online broker's performance in 15 categories. The categories were determined by a separate survey in which more than 500 investors rated the importance of various broker attributes.
This year, Interactive Brokers ranked strongly in Trade Execution Speed/Price, Options Trading Platform, Margin Investing/Interest Rate, Portfolio Analysis & Reports and Access To IPOs.
Best Online Brokers Features: Interactive Brokers |
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| Minimum to open an account: $0 |
| Number of accounts: 1.073 million |
| Shorting restrictions: Must meet requirements for margin permission |
| Margin restrictions: May reduce marginability on stocks under certain circumstances, including low liquidity |
| Special features: IBKR Mobile, Bitcoin futures, OptionTrader, Impact Dashboard; two commission schedules: IBKR Pro and IBKR Lite (designed for retail investors) |
| Website: InteractiveBrokers.com |
Interactive Brokers' Trade Execution Speed And Trade Price
New attribute Trade Execution Speed/Price was the most important attribute in the 2021 Best Online Brokers Survey, based on survey participants' responses. Within that category, Interactive ranked among the top five brokers.
Interactive Brokers remains at the forefront of Trade Execution. The brokerage's U.S. stock price executions were significantly better than the industry average during the first half of 2020, according to IHS Markit, a third-party provider of transaction analysis. For each 100 shares, the industry average showed 15 cents of price improvement, while Interactive Brokers had 62 cents of price improvement.
Interactive Brokers' IB SmartRouting searches for the best firm stock, option, and combination prices available at the time of your order and seeks to immediately execute your order electronically.
These claims are supported by client feedback. "Interactive Brokers has great technology," said Interactive client Tim Dill. "They have pre-programmed algos that achieve better prices than traditional market orders."
Mobile Options Trading App
Interactive also ranked among the top five in the Options Trading Platform attribute.
The brokerage offers OptionTrader, a proprietary trading tool for executing speculative trades or building complex, multileg orders to hedge a position. It also offers a Mobile Options Trading app.
Industry-Low Margin Rates At Interactive Brokers
Interactive Brokers ranked No. 2 in the Margin Investing/Interest Rate attribute, just behind Tastyworks.
It offers margin rates as low as 0.75% for the IBKR Pro tier. Per Interactive Brokers, IBKR Lite is meant for retail investors, whose lowest margin rate is 2.59%.
In comparison, No. 1-Ranked Tastyworks has margin rates as low as 5% for debit balances $1,000,000 and up. Interactive Brokers' lower margin rate will have a big impact, especially for investors who hold large margin balances for extended periods of time.
Interactive Releases Impact Dashboard
In October 2020, Interactive Brokers launched its Impact Dashboard to help clients evaluate and invest in companies that align with their values. The Impact Dashboard allows investors to select their personal investment criteria from 13 impact values, including clear air, gender equality, racial equality and other principles.
"The future of sustainable investing begins with the Impact Dashboard, which allows investors to align their portfolios with their values," said Will Peterffy, ESG director at Interactive Brokers in a news release. "In a world lacking transparency, the dashboard quickly analyzes and grades your stock portfolio based on your values and presents your holdings through a personalized impact lens."
ESG investing — which puts a priority on environmental, social and corporate governance issues — continued to skyrocket in 2020. Inflow to ESG ETFs surged to $97 billion in 2020, according to Track Insight. ESG ETFs' assets ballooned 223% to $189 billion and nearly 200 ESG ETFs were brought to market in the year.
Clearly, the ESG trend isn't going away anytime soon. And Interactive Brokers makes it possible to create and maintain your own personal ESG strategy.
Access To High-Profile IPOs
There were a number of high-profile initial public offerings in 2020, including Airbnb, DoorDash and Snowflake. Interactive was among the five best brokers in Access To IPOs in the 2021 Best Online Brokers.
According to the company, IB monitors for upcoming IPOs and makes every effort to provide customers the ability to enter orders in advance of the day at which trading begins in the secondary market.
While Interactive Brokers rated strongly in this category, the Access To IPOs attribute remains a low priority for investors.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen.
