Goal: Uncover Disrupters in 2019 Brokerage Industry

This research is designed to inform both consumers and industry participants of the rapidly evolving landscape and future of the online brokerage industry.

Two major shocks in 2019 will have a profound impact on the future of the industry.

1) The major players moved to commission-free trading. The move was spurred by the traction that no-frills, commission-free upstarts such as Robinhood were gaining.

2) A $26 billion merger between Charles Schwab and TD Ameritrade was announced, bringing two of the industry’s largest players together.

The Scope: Provide Competitor Insights with Recent Developments & Industry Projections

The report investigates three key areas:

1) Comparison of the major players and their key offerings

2) Assessment of recent developments and their impact

3) Five trends that will shape the industry’s future

Analysis Summary:

Wakefield analyzed the performance of the eight major online brokers across seven areas to compare their offerings. Based on the analysis, we view Charles Schwab, TD Ameritrade (soon to merge with Schwab) and Fidelity as the market leaders in terms of the breadth and depth of their offerings.

Robinhood was once a major disrupter when it began offering commission-free trading, garnering 10 million customer accounts, and it continues to offer attractive rates on sweep account and margin rates. However, its no-frills offering will make its platform harder to stand-out in a zero-commission world.

In the coming years only a few key players will remain. Brokers will be focused on amassing customer accounts to boost returns from uninvested cash. This favors the biggest players that can operate at scale and also cut costs, which will incentivize further consolidation. The environment will also create high barriers for new market entrants. However, in the interim customers will be the winners as the battle for accounts moves away from fees and toward customer service offerings.