BrokerChooser is an independent global retail brokerage comparison service that has so far reviewed 100+ brokerages worldwide and serves more than 200,000 users per month. Our analyst team is constantly on the lookout for emerging trends in the retail brokerage world. Below, you can find the main takeaways of our analysis on payment for order flow, new account openings, number of trades executed, and much more.
Payment for order flow
- TD Ameritrade and Robinhood made the most revenue from stock payment for order flow (PFOF) in 2020-2021: $944 and $532 million, respectively. Fidelity and Vanguard don't make any revenue from stock PFOF. PFOF revenue from options trading is roughly two times higher than PFOF revenue from stock trading.
- Citadel paid the most for payment for order flow in 2020-2021: roughly 39% of the total payment for order flow. Major market makers provided $6.1 billion in net price improvement and executed more than 1 trillion shares in 2020 and 2021. When COVID hit the market and around the meme stock frenzy in Q1 2021, market makers provided 40-70% more net price improvement than the average in 2020-2021. The main reason behind it is the lower liquidity and higher spreads.
New account opening takeaways
- New account openings dropped by 8% in Q1 2022 compared to the previous quarter and were down by nearly 70% down compared to Q1 2021, which was an outstanding quarter due to the meme stock frenzy.
- In Q1 2022, most brokerage accounts were opened at Charles Schwab-TD Ameritrade and Fidelity (Fidelity's numbers are estimated). In 2021, Robinhood reported the highest number of account openings.
Customer assets takeaways
- US brokers have more than 20x more assets under management than the other brokers included in our analysis. The main reason is that US brokers manage a significantly higher number of client accounts than the other brokerages.
- Customers at Robinhood generally have the smallest accounts, with an average of $4,000. Meanwhile, the average client account at Fidelity is more than 60x bigger.
Executed trade numbers takeaways
- The number of executed trades was slightly higher (4%) in Q1 2022 compared to Q4 2021. On an annual basis, however, the number of trades plunged 32% as the meme stock frenzy fueled outstanding trading activity in the first quarter of 2021.
- Customers trade 5-10 times more at brokers like Interactive Brokers and XTB, as these services are typically used by traders as opposed to long-term investors.
Broker revenue and profit takeaways
- In Q1 2022, the revenue of brokerages was essentially unchanged (+1%) from a year earlier while net profit decreased by 10% on average. Meanwhile, new account openings plunged by 70% in the same period.
- There are significant differences between revenue per customer at individual brokers. Among the brokerages included in our analysis, Robinhood reported the lowest figure in Q1 2022, roughly 94% below the market average.
Retail customer behavior
- 73% of users who answered the questions on the "Find My Broker" tool on our website said they were first-timers or know only the basics of trading. The majority of users said they traded either on a daily (35%) or weekly (16%) basis.
- Stocks and ETFs are the most popular products, with 39% of users selecting them as the most important product type.
- About 60% of customers prefer lower costs over the quality of service.
- Roughly half of retail customers are looking to invest less than $1,000.
Data dashboard for journalists
Ádám Nasli, Broker Expert: [email protected]