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Apr 21st
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What is the best brokerage firm?

moneylogo040411_optBY WARREN BOROSON

Consumer Reports, that splendid publication, asked its readers to evaluate brokerage firms, and 7,327 readers responded. The clear winner was USAA Brokerage Services (February 2012).

Among discount/online brokers, USAA racked up a score of 93. Tied for second place, with scores of 89, were Scottrade and Vanguard Brokerage Services. Then came Charles Schwab (84), TD Ameritade (83), E-Trade (82), Fidelity Brokerage Services (81), Wells Fargo (WellsTrade) (74), and at the very bottom, Merrill Lynch/Bank of America, with 72.

Criteria included customer service, financial advice, website usability, and phone service.

As for full-service brokerages, the leader was Edward Jones, with 83, followed by Raymond James (82), Ameriprise (80), and Morgan Stanley Smith Barney (71).

The more money that readers had with a broker, the more satisfied they were. (Perhaps because they received more attention.) Consumer Reports therefore adjusted the scores for account size.

Differences of less than 4 points, wrote CR, were “not meaningful.”

CR also noted that the survey didn’t take into account recent mergers, which may have affected services. For example, Wells Fargo was integrating Wachovia when the survey was made.

The magazine also noted that its subscribers “might not be representative of the general U.S. population.”

Still, 95 percent of USAA and Vanguard customers reported none of the following: unexpected fees, inappropriate advice, or pressure to buy an investment. Ten percent of those reporting on Merrill Edge said they had been charged unexpected fees, and 9 percent of those reporting on Morgan Stanley.

USAA is a financial company that began in 1922 when 25 Army officers offered to insure one another’s vehicles because no one else would. (The initials stood for U.S. Automobile Association.) Today USAA offers no-load mutual funds, all kinds of insurance (including annuities), credit cards, banking services, mortgages, and so forth. It is headquartered in San Antonio. Texas. Phone: 1-800-531-8722.

To obtain USAA auto insurance, usually you must be an armed forces veteran.

Of 12 USAA mutual funds rated by Morningstar in its flagship publication, not one has earned less than 3 stars. Six received 4 stars (above average), five 3 stars, and one 5 stars. An impressive record.

The author has USAA auto insurance – obtained during a period when it was open to non-veterans — as well as USAA annuities.

To receive Warren Boroson’s column regularly, drop him a note at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .'; document.write( '' ); document.write( addy_text90130 ); document.write( '<\/a>' ); //-->\n This e-mail address is being protected from spambots. You need JavaScript enabled to view it


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