Data dashboard for journalists

BrokerChooser is an independent global retail brokerage comparison service that has so far reviewed 100+ brokerages worldwide and serves more than 300k 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.

Comments on the UK Core Investment Advice regime

• The FCA wants to bring new-to-market consumers onto the UK investment advisory market by altering how investment advisory services are provided in the UK.

• Implementation of such a structural change could be difficult hence we answered the FCA’s call to explore possible alternatives that might help achieve its objective.

• Our data revealed a huge gap between the total number of beginner consumers visiting a broker’s website versus the number of such consumers actually completing registration and account opening processes as well as depositing money to start investing. The vast majority of beginner consumers are getting lost during the onboarding process.

• We think that brokers would benefit from regulatory support helping them streamline and simplify their onboarding processes, resulting in a lower churn rate and increased investment activity by UK beginner investors.

READ THE DETAILED ANALYSIS ON THE CORE INVESTMENT ADVICE REGIME

Comments on the SEC’s proposed Order Competition Rule

• The Order Competition Rule proposed by the SEC would require orders of individual investors to be exposed to competition in fair and open auctions before they could be executed internally by any market maker, with the aim of bringing greater competition in the marketplace for retail market orders.

• Despite challenges concerning the rule’s implementation, we believe that the likely impact of the proposed Order Competition Rule could be net positive.

• Our data shows that the proposed Order Competition Rule is addressing existing problems that affect US customers, while preserving important developments and benefits on US markets today such as zero-commission trading for customers and payment-for-order-flow revenue for brokers.

READ OUR ANALYSIS ON THE PROPOSED ORDER COMPETITION RULE

New account opening takeaways

• US brokers lead the way in terms of total brokerage accounts. There are 8x more brokerage accounts at US brokers than at the other brokers included in the analysis.
  Compared to a year earlier, 2023 is flat in new account openings but lag behind 2021. 
  Account openings grew 16% in Q3 2023 compared to Q3 2022, while 4% higher than in Q2 2022.

READ THE DETAILED ANALYSIS OF ACCOUNT OPENING

Customer assets takeaways

• Between 2015 and Q3 2023, assets under management at the brokers covered in the analysis had a compounded annual growth rate (CAGR) of 28%. Between 2019 and 2020, the value jumped significantl, reflecting the activity of retail investors in this period. 
• US brokers have more than 20x more assets under management than the other brokers included in our analysis. This is mainly due to the fact that US brokers have significantly more accounts compared to other brokers.
• Customers at Robinhood generally have the smallest accounts, with an average of $4,000. Meanwhile, the average account size of Fidelity customers is more than 60x bigger.

READ THE DETAILED ANALYSIS OF CUSTOMER ASSETS

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.

READ THE DETAILED ANALYSIS OF EXECUTED TRADE NUMBERS 

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.

READ THE DETAILED ANALYSIS OF BROKERAGE REVENUE & PROFIT

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.

READ THE DETAILED ANALYSIS OF RETAIL CUSTOMER BEHAVIOR

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.

READ THE DETAILED ANALYSIS OF PAYMENT FOR ORDER FLOW