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Investors Business Daily
Investors Business Daily

Thinkorswim Fuels TD Ameritrade Into Top 3 Brokers Before Schwab Union

Since its founding over 50 years ago, TD Ameritrade has adapted to the ever-changing Wall Street landscape — a landscape that some would say was a bit dystopian in 2022. Yet in the 11th annual Best Online Brokers survey, TD Ameritrade, with the help of its beloved Thinkorswim trading platform, climbed into the top three best overall brokers, ahead of its transition to becoming part of Charles Schwab.

While a bear marauded though last year's market, TD Ameritrade focused on providing top-notch customer services to meet client demand. This focus led to "record positive service levels" and client survey scores that reached "all-time highs in December 2021 and July 2022," according to Barry Metzger, head of trading & education with Charles Schwab, in an interview with IBD.

Client satisfaction helped TD Ameritrade nudge past E-Trade and Vanguard to claim its No. 3 spot. Charles Schwab took at No. 1 and Fidelity ranked No. 2.

To determine the best brokers, IBD and polling partner TechnoMetrica Market Intelligence asked 3,446 investors to rate their primary online broker in important performance categories. The rankings are based solely on customers' survey responses.

It earned the top score in six of 18 traits that its clients deemed the most important.

TD Ameritrade broke back into the top three overall brokers for the first time since 2016 and for the fourth time since the survey started in 2012.

Thinkorswim: TD Ameritrade Becoming Charles Schwab

The story of TD Ameritrade begins back  in 1971, when it was founded as Ameritrade. Headquartered in Omaha, Nebraska, the company was a pioneer in online trading. It made trading affordable and accessible to the masses.

Schwab was founded in 1971 too. But it didn't start its online brokerage until 1974.

In October 2020, Charles Schwab completed its acquisition of TD Ameritrade. In late 2022, TD Ameritrade clients were notified their accounts were being moved into Charles Schwab starting in 2023.

Meanwhile, Thinkorswim, TD Ameritrade's sophisticated trading platform, will also transfer to Schwab later in 2023.

TD Ameritrade: Trade/Execution/Speed/Price

Besides coming in first place in six separate categories, TD Ameritrade ranked among the three best online brokers in four of the other 12 categories.

And TD Ameritrade shined where it matters most with investors. It came in No. 1 in the attribute  trade/execution/speed/price, which investors ranked as most important to them (see our story on trade execution/speed/price and equity trading platforms). What's more, it took the No. 1 position in the three other attributes investors ranked as most important to them: website security, equity trading platform and site performance. And it was No. 1 in educational resources and options trading.

TD Ameritrade is well aware of its investors' priorities. "TD Ameritrade uses advanced routing technology and evaluates execution quality, mindful of what matters most to our clients," said Metzger. "The vast majority (98%, as of September 2022) of market orders executed receive a price better than the nationally published quote. Price improvement provides significant savings, on average $1.32 per 100 shares."

TD Ameritrade Account Features

Minimum to open an account: $0
Number of accounts: 11 million
Shorting restrictions: Must consent to rules for margin trading and short sales
Margin restrictions: Must have $2,000 in cash or marginable securities in account
Shorting leveraged ETFs initial margin: 50%, but may impose higher requirements to protect clients from greater exposure to market risk
Special feature: Thinkorswim trading platform

Regarding its education resources, TD Ameritrade continues to see its hard work pay off, as it has consistently ranked highly in the category over the past four years.

"Over the past decade, TD Ameritrade has invested big in education," said Metzger. "It now has a massive, industry-leading library filled with content ranging from personal finance to advanced trading strategies."

He added: "This library is only getting bigger — every week TD Ameritrade creates more new education than any of its competitors."

Equity/Options Trading Platform: Thinkorswim

Driven by its sophisticated Thinkorswim trading platform, TD Ameritrade takes the No. 1 ranking in the equity trading platform and options trading platform categories. Customers should feel confident, knowing the platform will also transition over to Schwab and is a high priority for the brokerage firm. Thinkorswim continues to receive annual updates with new features.

Thinkorswim was acquired by TD Ameritrade back in 2009 from Thinkorswim Group Inc.

The platform now has "greater customization available on the desktop through new charting and programming capabilities," Metzger said. And it has "integrated news features to contextualize market moves on mobile devices and a more robust and streamlined trading offering on the web."

Thinkorswim mobile is available on a phone or tablet, while Thinkorswim web is software available through the browser. The original Thinkorswim started out as a desktop platform.

"Traders using the Thinkorswim suite of platforms are now more informed and empowered than ever before," said Metzger.

Its customers value the updates. "Thinkorswim has great tools that are totally configurable," said Giuseppe D'Angelo, a TD Ameritrade user. "I really like the investing education" that TD Ameritrade offers.

That kind of devotion helps TD Ameritrade attract customers. Notably, the brokerage also ranked among the top three in IBD's net promoter index. The index measures how willing brokerage clients are to recommend the broker to others.

Follow Scott Lehtonen on Twitter at @IBD_SLehtonen.

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