For the past five years, Investor's Business Daily and TechnoMetrica have conducted an annual study of online brokers aimed at measuring investors' sentiment regarding customer experience and satisfaction with their primary online brokers. The 2017 edition of the Best Online Brokers study employed a methodology that was unchanged from the previous years.
The research was divided into two phases.
wbobpent-012716In the first phase of the study, we identified and ranked the broker characteristics that were most important to investors. The editors of IBD and TechnoMetrica identified for evaluation 24 potential attributes of online brokers.
From June 27 to July 5 of last year, 802 visitors to IBD's Investors.com website participated in the phase one survey.
The survey tested the 24 potential attributes using the MaxDiff method, which helps determine the attributes' relative importance to the respondents. Investors were presented with combinations of the attributes, and were asked to identify which characteristics were most and least important to them.
Based on the data collected during phase one, TechnoMetrica narrowed the 24 attributes to 13. We also developed the weights that should be assigned to each of the 13 attributes to compute an Overall Customer Experience Index for each broker.
In comparison to last year, six attributes are more important to investors in this year's Best Online Brokers study. The attributes are Low Commission & Fees, Educational Resources, ETF Choices, Investment Research, Research Tools, and Portfolio Analysis & Reports.
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Meanwhile, six attributes also decreased in importance this year: Mobile Platforms & Mobile Trading Opportunities, Options Trading Platform, Site Performance, Trade Reliability, Customer Service, and Equity Trading Tools.
The remaining attribute, Investment & Retirement Planning Tools, did not qualify as a top attribute in last year's study.
bob-methodlist-013017We implemented the phase two portion of the survey from August through December, during which 4,752 visitors to the IBD website who use online stockbrokers participated in the research.
The data analysis in this report is limited to the online brokers that had at least 125 of their customers who participated in the survey. Of the 24 online brokers that were explicitly listed in the questionnaire, six garnered 125 respondents or more.
Survey respondents rated their past six-month experiences with their primary broker using a five-point scale (Excellent, Very Good, Good, Fair and Poor) for the 13 attributes.
For each broker attribute, we developed a Customer Experience Index using the question: Based on your experience with your primary online broker during the past six months, how would you rate your primary online broker?
The Customer Experience Index denotes the difference between the percentage of respondents giving ratings of Excellent and Very Good and the percentage who gave ratings of Fair and Poor.
For example, if 30% of respondents rated customer service of a broker as Excellent, 26% Very Good, 20% Good, 13% Fair and 11% Poor, we calculated the Customer Experience Index to be 32% (56% less 24%).
This report highlights the three brokers with the highest Customer Experience Index for each of the 13 attributes.
To arrive at our Overall Customer Experience Index, we combined the subindexes for all 13 attributes using the weights we developed in phase one. The three online brokers with the highest ratings in this index make up our Top Overall Customer Experience list.
Mayur is president of TechnoMetrica Market Intelligence.