INCOME FOR LIFE NEW POLL: How the pandemic is reshaping
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
INCOME FOR LIFE
We show you how to manage your retirement savings to achieve the lifestyle you want. p 50
NEW POLL:
How the
pandemic
is reshaping
retirement. p 62
OCTOBER 2021
Free Financial Tools
Wealth Management
Worried about
your retirement?
It’s time to get
a plan.
Our free Retirement Planner can help you
track your retirement accounts and take control
of your financial life. And if you work with one
of our advisors*, online or by phone, you also get
TM
access to our Smart Withdrawal tool. This
innovative tool helps you plan for retirement
spending just as thoughtfully as you save.
Get started with your free Retirement
Planner or talk to an advisor today at:
FREE FINANCIAL TOOLS AVAILABLE ON WEB & MOBILE
personalcapital.com/kip
*Advisory services are offered for a fee by Personal Capital Advisors Corporation ("PCAC"), a registered investment adviser with the Securities and Exchange Commission. Registration does not
imply a certain level of skill or training. Investing involves risk. Past performance is not indicative of future returns. You may lose money. All visuals are illustrative only. Actors are not PCAC clients.
Visit PersonalCapital.com. PCAC is a wholly owned subsidiary of Personal Capital Corporation ("PCC"), an Empower company. PCC is a wholly owned subsidiary of Empower Holdings, LLC.
© 2020 Personal Capital Corporation. All rights reserved.
CONTENTS
KIPLINGER’S PERSONAL FINANCE
FOUNDED 1947
VOL. 75 NO. 10
A NEW CAREER
AHEAD
MAY BE CALLING.
PAGE 40 9 TOPIC A Cash-rich states lower taxes ...
October is a spooky month for stocks ... Don’t
lose track of your retirement savings ... New
perks at work, for a price.
INVESTING
18 WE RANK THE ONLINE BROKERS A record
number of new investors trading stocks and ETFs
are putting brokerages through their paces. We
reviewed nine online brokers to see which ones
have handled the surge with aplomb. We also
rated their investment options, mobile apps,
tools, research and more. PLUS: Fledgling firms
that fill a niche.
28 THE BEAUTY OF BORING STOCKS Roller-
coasters aren’t for everyone, nor are volatile
stocks that take you on a wild ride. So we found
six companies that will deliver predictable sales
and steady profit growth whether the economy
is booming or contracting.
31 STREET SMART The truth about index
funds, by JAMES K. GLASSMAN.
37 INCOME INVESTING Stay above the interest
rate fray, by JEFFREY R. KOSNETT.
34 MORE ABOUT INVESTING ETF spotlight
(34). Fund spotlight (36). Kip 25 update (38).
MONEY
40 HOW TO DECIDE IF IT’S TIME FOR A
CAREER CHANGE The pandemic upended
millions of jobs and changed the way many
TRACY GROSSHANS
of us work. If those changes have you thinking
about finding a new job or new career, check
out the stories of four people who did just that.
PLUS: Get help from a career coach.
ON THE COVER: PHOTO-ILLUSTRATION BY C.J. BURTON 10/2021 KIPLINGER’S PERSONAL FINANCE 1
CONTENTS CONTINUED
49 CREDIT/YIELDS Credit cards offer travel top worry, and many preretirees are boosting
savings and planning to work longer.
REWARDS
insurance.
68 COMPLAIN AND GET RESULTS Faulty prod-
ucts and bad service can be frustrating. But by
COVER STORY FUNDAMENTALS using time-tested strategies for complaining
RETIREMENT effectively, you’ll have a good chance of getting
64 PRACTICAL PORTFOLIO A company’s sus- satisfaction. PLUS: A look at car lemon laws.
50 SPEND WITHOUT WORRY Retirees often tainability report will tell you whether it is meeting
withdraw less from their nest egg than they can its environmental, social and governance goals.
afford to because of worries about running out IN EVERY ISSUE
of money. We tell you how to ensure that your 66 MILLENNIAL MONEY Should you invest in
5 READER FEEDBACK Great retirement spots.
savings will last and provide the income you need. crypto? by RIVAN STINSON
6 FROM THE EDITOR Complain and be heard.
62 THE PANDEMIC IS RESHAPING RETIRE- 67 BASICS Think twice about applying for 72 MAKING IT WORK The pandemic pet
MENT Our latest poll shows that inflation is a credit. problem.
MAKE YOUR
SAVINGS LAST
AS LONG AS YOU
NEED IT. PAGE 50
JULIA ALLUM
2 KIPLINGER’S PERSONAL FINANCE 10/2021
DISCOVER ALASKA
The Last Frontier
ABOARD AMERICAN CONSTELLATION
Explore the untouched natural beauty of Alaska aboard the region’s newest small cruise
ship. On this unforgettable journey, explore breathtaking scenery and historic treasures,
while receiving our hallmark personalized service.
Small Ship Cruising Done Perfectly®
Skagway
Haines
Call
Glacier Bay USA Canada
1-888-240-4951
Icy Strait Juneau
Point
to request a
ALASKA
Tracy Arm/
Sawyer Glacier
FREE
Frederick
Sound Petersburg
Cruise Guide
GET MORE ADVICE FROM KIPLINGER
.com
ALL NEW
ALL-NEW
KIPLING
PODC
New weekly episodes bring y
advice and guidance to help
ƀ Invest for growth ƀ make
and income, of you
ƀ slash taxes, ƀ mainta
ƀ save for retirement, ƀ and m
13 REASONS TO SHOP AT
kiplinger.com/links/p WALMART (EVEN IF YOU
HATE WALMART)
The retail giant polarizes people but has savings
you shouldn’t pass up.
kiplinger.com/kpf/walmart
MIGHTY MID-CAP STOCKS
Meet (and profit with) the “unsung heroes” of the
market: stocks that aren’t too big or too small.
kiplinger.com/kpf/midcaps
TACKLE YOUR DEBT BEFORE
RETIREMENT
You don’t want to carry a heavy debt load
into a time you’re supposed to be relaxing.
kiplinger.com/kpf/retirementdebt
SUBSCRIBE
5:00
Today
Apple, Google
Play, Spotify,
22:08 Overcast, RSS
Profit from the best of Kiplinger delivered
to your e-mail inbox every weekday.
HOW TO REACH US: Subscriptions. For inquiries about ordering, billing or renewing a subscription, or to report address changes,
Sign up for our Kiplinger Today e-newsletter at
please have your mailing label handy to reference your account number and visit us online at kiplinger.com/customer-service
or call 800-544-0155, Monday through Friday between 7 A.M. and 9:30 P.M. Central Time, or Saturday between 8 A.M. and 5 P.M. kiplinger.com/links/ktoday.
ISTOCKPHOTO.COM
Central Time. You can also write to Kiplinger’s Personal Finance, P.O. Box 37234, Boone, IA 50037-0234, or send an e-mail to
KPFservice@kiplinger.com. Reprints. PARS International Corp. (212-221-9595, ext. 237; e-mail, jennifer.eclipse@parsintl.com). FACEBOOK: KiplingerPersonalFinance
Content licensing. E-mail licensing@kiplinger.com. Mailing lists. From time to time we make our subscriber mailing list available TWITTER: @Kiplinger
on a one-time basis to carefully screened companies whose products may be of interest to you. If you would rather not receive INSTAGRAM: @KiplingerFinance
such solicitations, send your mailing label to P.O. Box 37234, Boone, IA 50037-0234 and instruct us to exclude your name.
4 KIPLINGER’S PERSONAL FINANCE 10/2021
READER FEEDBACK
automatically eliminating access (“Think Twice
Great Retirement Spots cities that are either not
historically diverse or do
Before You Close a Credit
Card,” Aug.). Being able
I smiled to myself as you noted that you may not want to withstand not make special efforts to look at transaction his-
Michigan winters in retirement (“From the Editor,” Aug.). Rethinking to attract residents based tory becomes difficult at
is good. I’m 82 and have been retired for almost 20 years. Having on skin color or sexuality. best. Many of us have be-
relocated several times, we stayed in my last community, New
While there is certainly come accustomed to not
nothing wrong with want- having paper copies of state-
Rochelle, N.Y. We bought a ranch house built on a slab, with no
ing to live in a diverse com- ments, as they are so easily
steps to enter and an ability to live entirely on the first floor. Look
munity, in the final analysis available online.
for something similar, or a condo with a couple of elevators. Walking that should be an individual R. PETER HEINKEL
and climbing steps will become a concern. Also, you’ve likely spent choice, and you should not VIA E-MAIL
many years building friendships; moving to a single-family home limit your selection of po-
in a new community will not replace those friendships or easily let tential retirement locations Indexing gurus. In “Lessons
you make others. It’s better to find a retirement community where to those that are diverse From Top Investing Gurus”
people have left friends and communities behind and are seeking because some of your read- (Aug.), I think you should
new friends. If there are children and grandchildren and you can re- ers have indicated that they have included a guru to
locate reasonably nearby, so much the better. The desire for family want you to. A far better speak about index investing.
only grows stronger as you age. approach would be to pro- JOHN E. CLINARD
vide available demographic DENVER
PETER A. KORN
NEW ROCHELLE, N.Y. data on each potential re-
tirement location and let Editor’s note: We have given
readers make the decision a lot of space over the years to
People from moderate cli- I strongly disagree with as to whether a particular some pretty good indexers, in-
mates often don’t realize the the way you have decided location is desirable for cluding Jack Bogle and Burton
extremes of hot and cold to introduce diversity into them. Malkiel, just to name two. We
in other areas. Those of us your annual selection of TERRY POWERS just interviewed former Van-
who have lived in Minne- places to retire. By looking VIA E-MAIL guard CEO Jack Brennan in the
sota have seen changes from for “cities that are welcom- July issue. For more on indexing,
+105 degrees to –34 degrees. ing to minorities and people Closing card accounts. Once see “Street Smart,” on page 31.
And that is in the Twin Cit- with less-mainstream life- you close a financial ac-
ies. People come to fish for styles,” you run the risk of count, you lose online Better security. There is ab-
walleye in the spring, when solutely no reason that you
it’s 80 degrees, and don’t have to put down correct,
understand that we have READER POLL honest answers to password
fished in winter through security questions (“Tech,”
2 to 3 feet of ice at –20 What is your strategy when you have a May). In fact, most people
degrees and colder. One would have many fewer
young lady came up to the
complaint about a product or service? headaches if they had not.
bus stop on a late-October 94% All you need to do is write
day wearing high heels, a I go to the source (or customer service rep) to try to get it fixed down your answer.
light summer dress and no or improve the service. JOHN ROBIDEAU
coat. She stood there shiver- VIA E-MAIL
16%
ing and said to me, “I hope I post an unfavorable review online.
it doesn’t get much colder.” CONTACT US
Only one month into fall, at 13%
Reader Feedback may be edited
40 degrees in the morning, I contact the CEO or high-level manager.
for clarity and space, and initials
I didn’t have the heart to 8% will be used on request only if
tell her winter doesn’t start I complain to the Better Business Bureau or other consumer organization. you include your name. Send to
until December and lasts Kiplinger’s Personal Finance,
until mid March. Test-drive 4% 1100 13th St., N.W., Suite 1000,
I go to Facebook or Twitter to complain. Washington, DC 20005, or e-mail
all seasons, as you have said. to feedback@kiplinger.com. Please
KEN JAROSCH For more on how to complain effectively, turn to page 68. include your name, address and
ST. PAUL daytime telephone number.
10/2021 KIPLINGER’S PERSONAL FINANCE 5
FROM THE EDITOR
Mark Solheim my account online. Getting nowhere with my
“elite team” reps, I found the e-mail and cor-
porate address of the E*Trade CEO at www
.ceoemail.com and fired off a letter to him (not
Complain and Be Heard invoking my Kiplinger connection). I quickly
heard back from a “corporate support man-
ager,” who investigated the issue and helped
repatriate my funds within a few weeks.
Speaking of brokers, this issue includes our
annual broker rankings, written by senior asso-
N
early everyone has a story about a de- and it took patience and persistence, plus por- ciate editor Nellie Huang. After hearing reports
fective product, disappointing service ing through a lot of fine print, to get results. from frustrated readers about long waits on
or a financial transaction gone awry. hold when contacting their brokerages, we
How to resolve those issues—which may in- Broker woes and wins. I have also used the recruited a team of staffers to make test calls,
volve hundreds or even thousands of dollars— tactic of going to the top, as in my quest to re- record the length of time on hold and see how
is the subject of our article on page 68, by staff cover funds from the Dutch Ministry of Finance accurately customer service reps could answer
writer Emma Patch. I have my own tales of in the Netherlands. I owned shares of MobilEye, a series of questions. The top firm for customer
complaining and employing the strategies rec- an Israeli company that developed driver- service: Merrill Edge. The top firm overall?
ommended in the article—and getting results. assistance technology, and Intel acquired the Please turn to page 18 to find out.
I shared some details in my June 2019 col- company in 2018. I sat back to wait for the buy-
umn about my struggle with a car dealership out money to hit my E*Trade account, as it hadUpdate for subscribers. We have switched
that sold a used SUV to my daughter. I had with previous mergers and acquisitions. to a new customer service bureau. For the past
helped her search for the vehicle and negotiate This time, because it was a foreign stock, few years, we’ve worked with a bureau in Palm
the price, but because she lived 900 miles I was supposed to fill out a Coast, Fla., but
away, in Wisconsin, she went to the dealer tender offer. But I missed the starting now your
without me. alert that E*Trade posted in correspondence
GETTING OUR MONEY
All went smoothly until she hit the F&I (fi- should go to
nance and insurance) office. My daughter made BACK FOR THE EXTENDED P.O. Box 37234,
a hefty down payment and financed about half WARRANTY AND GAP Boone, IA 50037-
the cost of the car to bolster her credit record. INSURANCE WE DIDN’T 0234. (You will see
But without realizing it, in the flurry of paper- several P.O. Box
WANT TOOK PATIENCE
work and signatures, my daughter also signed numbers—37231,
up for an extended warranty ($2,500) and gap AND PERSISTENCE. 37232, 37233 or
insurance ($895). The gap insurance was su- 37234—on cus-
perfluous because even if the car was totaled, tomer service, sub-
there was no way its value would be less than scription and renewal correspondence.) Please
the amount owed on the loan. watch out for unscrupulous agents who at-
By the time I got wind of all of this, it was tempt, without our permission, to solicit sub-
too late to cancel the transactions within the scription and renewal payments (at higher
“cooling off” period (typically a three-day prices than we charge) at addresses elsewhere.
window, but it varies by state). After a lot of The new address in Boone (also listed on pages
spadework to find out that the dealership’s 4 and 8) is the only legitimate address for send-
business manager had to handle the unwind- ing correspondence or subscription and renewal
ing, we went through the laborious process of payments for Kiplinger publications. During the
filling out the forms to cancel the unwanted transition, any correspondence or payment you
items. It was supposed to take four to six send to Palm Coast will be automatically for-
weeks to process, and after three months had warded to the new bureau in Iowa. ■
gone by with no refund, I wrote a note to the
POON WATCHARA-AMPHAIWAN
dealer’s chief financial officer and threatened
to complain to the Better Business Bu-
reau, as well as the state department
of transportation. He authorized the
MARK SOLHEIM, EDITOR
refund check that day. The process MARK _ SOLHEIM@KIPLINGER.COM
was grueling and frustrating, TWITTER: @MARKSOLHEIM
6 KIPLINGER’S PERSONAL FINANCE 10/2021
Female Monthly Rates
Age $100,000 $250,000 $500,000 $1,000,000
21-35 $7 $9 $12 $15
40 $8 $11 $15 $22
45 $10 $15 $24 $38
50 $13 $20 $34 $58
55 $18 $28 $50 $90
60 $24 $41 $73 $131
65 $34 $65 $122 $213
Male Monthly Rates
Age $100,000 $250,000 $500,000 $1,000,000
21-35 $7 $10 $14 $19
40 $8 $12 $17 $23
45 $11 $17 $27 $45
50 $14 $24 $41 $68
55 $20 $37 $68 $117
60 $30 $59 $109 $192
65 $44 $101 $191 $335
4.65
102,000 Customer Reviews
JOIN THE
MOVEMENT EDITORIAL
Mark K. Solheim
EDITOR
Anne Kates Smith
TO
EXECUTIVE EDITOR
MANAGING EDITOR Frederic Fane Wolfer
SENIOR EDITOR Sandra Block
ACCELERATE EDITOR AT LARGE Janet Bodnar
SENIOR ASSOCIATE EDITOR Nellie S. Huang
ASSOCIATE EDITOR Adam Shell
CANCER CONTRIBUTING EDITORS Lisa Gerstner,
James K. Glassman, Jeffrey R. Kosnett
STAFF WRITERS Emma Patch, Rivan V. Stinson
RESEARCH INTERN Michael Korsh
ART
DESIGN DIRECTOR Stacie A. Harrison
Right now, most clinical information
ASSOCIATE ART DIRECTOR Natalie F. Kress
is not regularly shared with the
researchers who are trying to uncover SALES
new information about cancer every PUBLISHER Paul Vizza (202-887-6558; Paul_Vizza@kiplinger.com)
day, but you can help change that. ASSOCIATE PUBLISHER Stevie Lee (Stevie_Lee@kiplinger.com)
SENIOR ACCOUNT DIRECTOR Maggie Kinsky (Maggie_Kinsky@kiplinger.com)
Patients can help accelerate research
ACCOUNT DIRECTOR, EAST COAST Meg Power (Meg_Power@kiplinger.com)
by sharing their data and unique
ACCOUNT MANAGER Rebecca Haber (Rebecca_Haber@kiplinger.com)
experiences.
DIRECT RESPONSE Anthony Smyth (914-409-4202; anthony@smythps.com)
When patients stand together with ADVERTISING OPERATIONS
researchers, they can unlock new HEAD OF REVENUE OPERATIONS, NORTH AMERICA Andy Price (Andy_Price@kiplinger.com)
discoveries and treatments. People with ADVERTISING OPERATIONS EXECUTIVEMike Roche (Mike_Roche@kiplinger.com)
MEDIA PLANNING MANAGER Andrea Crino (Andrea_Crino@kiplinger.com)
all types of cancer may be eligible to
join Stand Up To Cancer, Count Me KIPLINGER.COM
In and more than 7,500 patients Kyle Woodley
SENIOR INVESTING EDITOR
who have already participated in Rocky Mengle
SENIOR TAX EDITOR
this mission to accelerate the pace of SENIOR ONLINE EDITOR David Muhlbaum
cancer research. SENIOR RETIREMENT EDITOR Jackie Stewart
ONLINE EDITORS Lisa Kiplinger, Robert Niedt
ASSOCIATE TAX EDITOR William Neilson
Find out more and sign up CONTRIBUTING EDITORS Brandon Copeland, Karee Venema
to join the movement at CONTRIBUTING WRITER Dan Burrows
PRODUCT MANAGER Jenny Cohan
StandUpToCancer.org/CountMeIn
AUDIENCE ENGAGEMENT MANAGER Ben Demers
DIGITAL PRODUCER Quincy Williamson
EDITORIAL INTERN Michaela Wang
CIRCULATION
SENIOR CIRCULATION MANAGER Roseann Ciccarello
DIRECTOR, COMMERCIAL ART Lori Smedley
CUSTOM CONTENT
CUSTOM CONTENT DIRECTOR Barbara Baker Clark
Uzo Aduba
ASSOCIATE DIRECTOR Megan Harmon
Stand Up To Cancer
SENIOR EDITOR Eileen Ambrose
Ambassador
THE KIPLINGER WASHINGTON EDITORS INC.
1100 13th St., N.W., Suite 1000, Washington, DC 20005 (202-887-6400)
W.M. Kiplinger (1891–1967), Founder
Austin H. Kiplinger (1918–2015), Former Chairman and Editor
Knight A. Kiplinger, Editor Emeritus
CHIEF EXECUTIVE OFFICER Denise M. Elliott
SENIOR VICE PRESIDENT AND CHIEF CONTENT OFFICER Sarah Stevens
VICE PRESIDENT, MARKETING Christopher Moffa
VICE PRESIDENT, FINANCE Amy Vay
DENNIS PUBLISHING LTD, NORTH AMERICA
Randy Siegel
CHIEF EXECUTIVE OFFICER
Paul Vizza
GROUP PUBLISHER
GROUP CUSTOM CONTENT DIRECTOR Barbara Baker Clark
CUSTOMER SERVICE
Visit kiplinger.com/customer-service
Or call 800-544-0155
PRINTED IN USA
KIPLINGER’S PERSONAL FINANCE (ISSN 1528-9729) is published monthly by THE KIPLINGER WASHINGTON EDITORS, INC. Editorial and Executive Offices:
Photo By 1100 13th St., N.W., Suite 1000, Washington, DC 20005 (202-887-6400). Subscription Center/Customer Service: Visit us online at kiplinger.com/customer-service,
Matt Sayles call 800-544-0155, or e-mail KPFservice@kiplinger.com. POSTMASTER: Send all UAA to CFS. NON-POSTAL AND MILITARY FACILITIES: Send address corrections
Stand Up To Cancer is a division of the Entertainment Industry Foundation (EIF), to Kiplinger’s Personal Finance, P.O. Box 37234, Boone, IA 50037-0234. GST# 123395253. Volume 75, Issue 10. Copyright © 2021 by the Kiplinger Washington Editors,
a 501(c)(3) charitable organization. Inc. Periodical postage paid at Washington, DC, and at additional mailing offices. Subscription prices: In U.S. and possessions $34.95 for one year, $59.95 for two
years, $84.95 for three years. Additional international postage: $25.00 per year. Single-copy price: $6.99. The Kiplinger Washington Editors, Inc., is part of the
Dennis Publishing Ltd Group. 31-32 Alfred Place, London, WC1E 7DP, United Kingdom.AHEAD
TOPIC A
CASH-RICH STATES
DURING THE HEIGHT OF THE
pandemic in early 2020, the eco-
nomic downturn forced states to
LOWER TAXES
furlough employees and cut ser-
vices. Faced with the prospect of a
prolonged recession, state officials
braced for steep declines in reve-
The economic turnaround sparked a wave of cuts in nue from sales and income taxes.
state tax rates. But some say the efforts could backfire. But the past year and a half now
BY SANDRA BLOCK looks like a horror movie that
ILLUSTRATION BY ROBERT NEUBECKER 10/2021 KIPLINGER’S PERSONAL FINANCE 9AHEAD
abruptly turned into a musical. Ten (see the box below), along with a con- lower-income taxpayers as well. For
states are so awash in cash that solidation of tax brackets. For example, example, Montana increased its stan-
they’ve cut individual income taxes, Arizona’s state legislature lowered dard deduction to conform with the
with some of the tax cuts taking effect taxes for residents with income of federal threshold, which will reduce
in 2021 and others scheduled to phase more than $250,000 ($500,000 for taxes for taxpayers at the lower end
in over the next few years, according married couples filing jointly) starting of the income spectrum.
to the Tax Foundation, a tax policy this year; they will see their top mar-
research organization. Some people ginal rate drop from 8% to 4.5%. Be- Too soon? Not all states are celebrating
won’t have to wait for tax relief: Idaho ginning in 2022, Arizona will also an increase in revenue. States that rely
is sending every resident a tax rebate consolidate its four-bracket structure heavily on the hard-hit hospitality
check for $50 or 9% of their 2019 tax into two brackets, with a 2.55% rate industry are still struggling to recover
bill, whichever is greater. for income up to $27,272 for single from the pandemic. “In Hawaii and
The dramatic turnaround in state filers ($54,544 for married filers) Nevada, no one is talking about big
finances was propelled by the eco- and a 2.98% rate for income over that income tax cuts,” says Richard Auxier,
nomic rebound and revenue from fed- amount, down from the current mar- senior policy associate at the Urban-
eral stimulus packages. The stimulus ginal rate of 4.17% on income over Brookings Tax Policy Center, a tax
legislation also delivered billions of $54,444 ($109,088 for married couples). research nonprofit. “They’re talking
dollars in stimulus checks to individu- Iowa consolidated its nine tax brack- about using funds to plug budget holes
als, which enabled them to continue ets into four and reduced its top tax and prevent tax increases.”
to spend money during the pandemic. rate from 8.5% to 6.5%, effective in And even fiscally healthy states
That bolstered state sales tax reve- 2023. The state had earlier approved could see their tax revenues decline
nues, says Katherine Loughead, senior tax cuts that depended on meeting if the highly contagious delta variant
policy analyst for the Tax Foundation’s certain revenue triggers; the legisla- of COVID-19 contributes to another
Center for State Tax Policy. Likewise, tion accelerated the reductions by hit on the economy. State finances
enhanced unemployment benefits eliminating those triggers. have been volatile during the past
lessened the economic impact of fur- Although a reduction in top tax two years, Auxier says, and states can
loughs and layoffs. rates primarily benefits high earners, no longer rely on federal assistance to
The most common form of state tax other states enacted legislation that get them through downturns. States
relief is a reduction in top tax rates will lower taxes for middle- and that cut tax rates will need sustained
economic growth to provide enough
revenue to fund programs and ser-
Windfall for High Earners vices, he adds.
Perhaps with that in mind, several
Higher-than-expected revenue for fiscal 2021 prompted these states to enact legislation states have phased in their tax cuts
that will lower individual income tax rates.
over several years and/or tied them
to revenue targets. Theoretically, that
INCREASE IN REDUCTION
gives them the flexibility to postpone
REVENUE, FISCAL IN TOP INCOME EFFECTIVE
STATE YEAR 2019 TO 2021 TAX RATE DATE the reductions if they find themselves
in fiscal difficulties.
Arizona 21% 4.5% from 8% 2021 Loughead contends that such a
Idaho 35% 6.5% from 6.9% 2021 scenario is unlikely because she be-
Iowa 13% 6.5% from 8.5% 2023 lieves the tax relief will encourage
economic growth. “These are reforms
Louisiana 6% 4.25% from 6% 2022
that will attract more people to these
Missouri 17% 4.8% from 5.4% 2028* states, especially when there’s a huge
Montana 19% 6.5% from 6.9% 2024 rise in remote work,” she says.
New Hampshire 11% 0% from 5%† 2027*
Still, reducing taxes is much more
politically palatable than raising them,
Ohio 13% 4% from 4.8% 2021
and if states miss their targets, or find
Oklahoma 5% 4.75% from 5% 2021 themselves in fiscal distress, Auxier
Wisconsin 9% 5.30% from 6.27%§ 2021 doubts that lawmakers will roll back
the scheduled tax cuts. “Anytime a
*Tax cut phased in over several years. †Tax on income from interest and dividends. §Second-highest tax rate;
top rate remains the same. SOURCE: Tax Foundation
policymaker says, ‘We’ll raise taxes
later,’ I raise an eyebrow,” he says.
10 KIPLINGER’S PERSONAL FINANCE 10/2021Today, Italian takeout. Tomorrow, Italian vacation. After months of staying home, we can help you plan for a whole new view. At Schwab you get a financial plan based on your unique goals, with the flexibility to make updates when life changes. Whether it’s creating your own complimentary retirement plan online, or meeting one-on-one with a Financial Consultant, Schwab makes it easy to plan for tomorrow, today. Look forward to planning with Schwab Learn more at Schwab.com/Plan From Investor's Business Daily, October 12, 2020, ©2020 Investor's Business Daily, Inc. All rights reserved. ©2021 Charles Schwab & Co., Inc. All rights reserved. Member SIPC. (0621-1N90) ADP115182-00
AHEAD
INTERVIEW
OCTOBER IS A SPOOKY MONTH FOR STOCKS
The risk now is a surprise shift to tighter monetary policy by the Federal Reserve.
James Stack is a market his- which often is a precursor anticipate a larger correction the Fed take its foot off the
torian, investment adviser to higher volatility. The lull at some point between now gas in coming months. We
and president of InvesTech creates a sense of compla- and year-end, particularly wouldn’t have to see much
Research, an investment cency for investors who with high valuations and a of a change in Fed policy
newsletter with its home on expect the market only to high degree of exuberance to create a bearish climate.
the shores of Whitefish Lake, go up. When it starts going and public participation.
Mont., a world away from down and drops more than But it doesn’t necessarily Are you more worried about a
Wall Street. 10%, you end up with an mean a crash is coming. Fed misstep, COVID-19 or high
unusually large number of stock valuations? I doubt
After October stock market investors suddenly heading Do past crashes have things that the residual effects
crashes in 1929 and 1987 and for the exit. in common? Yes. Prior to of COVID are going to be
the October 2008 meltdown crashes in October 1929 and severe enough to cause a
during the financial crisis, Wall It has been a quiet year on Wall 1987, you had very hostile market panic or crash. And
Street gets the jitters this time Street. Should investors be monetary climates. Interest overvaluation doesn’t cause
of year. Why do past “Shock- worried? The largest pull- rates were rising rapidly. a bear market, but it does
tobers” still cause fear? I also back for the S&P 500 this In the 90 days prior raise the risks that when
recall 1978 and 1979 having year has been 4.2%, to Black Monday a bear does start it can be-
October mini-crashettes. and there have been in 1987, rates come a larger one.
But it was Black Monday in only three other went up 1.5
1987 [when the Dow Jones years with draw- percentage So, are rising rates the main
industrial average fell 23%] downs of 4.2% or points. We threat? That’s the one dark
that cemented October’s less in the past 70 don’t have a cloud. It worries me be-
reputation as a bad month years. The average hostile mon- cause nobody expects it—
for investors. Ever since intra-year drop etary climate the Fed said it won’t start
then, whenever October is 13.5%. It would now, although raising rates until 2023.
nears, it brings back fears. be logical to we could see But if the Fed is backed into
a corner by inflation pres-
Can fear make things worse? sures and starts talking
Psychology plays a big role about raising rates by year-
in sudden and more-severe end, it could create havoc
corrections. It goes back to on Wall Street. The stock
the saying from boxer Mike market’s dependence on
Tyson: “Everyone has a today’s record-low rates
plan until they get punched makes it the most interest-
in the nose.” Every novice rate-sensitive market in
COURTESY INVESTECH RESEARCH; PHOTO BY TREVON BAKER
investor is buy-and-hold history. Monetary policy
through thick and thin is the wild card and by far
until the market starts the greatest risk.
falling more than they
thought. What should investors do?
I’d keep more dry powder
What makes October so as we go through a season-
treacherous? The sum- ally unfavorable period,
mer months heading and I’d look at November or
into October tend to be December as a time to add
low-volatility months, to positions. ADAM SHELL
12 KIPLINGER’S PERSONAL FINANCE 10/2021AHEAD
LOST AND FOUND Unclaimed Retirement Benefits, www
.unclaimedretirementbenefits.com.
DON’T LOSE TRACK OF Next steps for your money. If your old
YOUR RETIREMENT SAVINGS 401(k) plan is still with a former em-
ployer, one option is to leave the money
A national database to track orphaned 401(k)s and pensions there. But you may not pay as much
could be on the way, but savers shouldn’t wait to take action. attention to the account, which could
lead to a portfolio that’s not appropri-
ate for your age and risk tolerance.
If you’re still working and have a
AT A TIME WHEN MANY AMERICANS ARE and contact information for the plan 401(k) at your new job, another option
worried that they won’t have enough administrator. If you don’t have any is to roll over the funds into your ex-
money to retire comfortably, thou- statements, contact your former em- isting plan, assuming your employer
sands have lost track of billions of ployer’s human resources department. allows it. Another option is to roll
dollars in savings. If your employer filed for bankruptcy, the money into an IRA. Having your
There are more than 24 million your 401(k) balance is protected from savings in one place will make it easier
“forgotten” 401(k) accounts contain- creditors and is likely still held at the to manage your investments.
ing some $1.35 trillion in assets, ac- investment company that adminis- If you’ve lost track of a pension,
cording to a report from Capitalize, tered your plan. In the case of a pen- request a pension benefits statement
which helps workers roll over their sion, it was either taken over by an from the plan administrator. Give the
retirement plans when they change insurance company or the federal administrator your address and phone
jobs. Companies are also holding on Pension Benefit Guaranty Corp., number so it can reach you to begin
to billions in unpaid pension payments which protects traditional pensions. payments. You may need to prove your
earned by former employees. You can track down your pension at work history and eligibility for the
The problem is so widespread that www.pbgc.gov/search/default.htm. pension; you can do so by providing
Congress is considering legislation to It’s also possible that your employer the plan administrator with old W-2
address it. “SECURE Act 2.0,” which turned over your 401(k) balance to forms or an earnings statement from
includes a wide range of benefits and your state’s unclaimed property fund. Social Security, which you can get by
protections for retirement savers Your state’s treasury department filing Form SSA-7050. You can get this
(see “You May Get More Time to should offer an online service that lets form at www.socialsecurity.gov/online/
Tap Retirement Accounts,” Aug.), you search for your money. You can ssa-7050.pdf or by calling Social Secu-
would create a national online lost- also check the National Registry of rity at 800-772-1213. DAVID RODECK
and-found database to help people
track down these orphaned plans.
Brian Stivers, owner of Stivers
Financial Services, in Knoxville, The Forgotten 401(k) Problem
Tenn., says he typically meets one As of May 2021, there was more than $1.3 trillion in “forgotten” 401(k) accounts
to two new clients a month who are owned by more than 24 million participants. The average balance in the
in this situation. Most of the time, orphaned plans is $55,400.
they’ve changed jobs and forgotten $1.32T $1.35T
about an old plan, usually because $1.25T
$1.18T 23.8M 24.3M
it had a small balance. Retirement $1.25T 22.6M
$1.03T $1.2T 21.3M
$1.00T 20.2M
plans are also misplaced when one 19.1M
$790B 18.0M 18.3M
spouse dies and the survivor is un-
aware of accounts with his or her 14.8M
former employers.
Tracking down your plan. If you think
you’ve lost track of a savings plan,
search your files for old retirement
account statements. These should 2013 2014 2015 2016 2017 2018 2019 2020 2021
provide some key data to help your SOURCE: Capitalize
search, such as your account number
14 KIPLINGER’S PERSONAL FINANCE 10/2021Pearl
Seas
Cruises®
Discover The Trea sures Of
THE GREAT LAKES
Explore charming towns and quaint villages as you delight your senses in the natural splendor
that surrounds you. On this captivating 7 to 11-night journey, travel in the sophisticated comfort
of our modern fleet and experience the most personalized service in small ship cruising.
Explore Well™
Lake
Superior
Sault Sainte Marie
Little Current
Mackinac Island Georgian Bay
Lake Parry Sound
Huron
Lake Midland
Michigan
TORONTO
MILWAUKEE Muskegon Lake Ontario
Holland Lake
Erie
Niagara Falls
Windsor
Call for a
FREE Cruise Guide 1-888-610-6945 PearlSeasCruises.comAHEAD
OPEN ENROLLMENT
CALENDAR
NEW PERKS AT 10/2021
WORK, FOR A PRICE
WHEN EMPLOYEES SIGN UP FOR OPEN
enrollment this fall, many will see an
expanded menu of benefits, ranging from
pet insurance to legal services. A survey
by consulting firm Willis Towers Watson
found that 94% of employers believe that
voluntary benefits—which typically aren’t
subsidized but are offered to workers at a
group rate discount—are important to their
employees, up from 36% in 2018.
Lydia Jilek, senior director of voluntary
benefits solutions at Willis Towers Watson,
says the pandemic and an increasingly
diverse workforce have accelerated calls
for benefits that meet employees’ differing
needs. And faced with a labor shortage, ▲ FRIDAY, OCTOBER 1 turns. To find stocks that are less
The Free Application for Federal likely to be affected by market
employers are feeling pressure to offer bene-
Student Aid for the 2022–23 volatility, turn to page 28.
fits that will attract and retain employees.
Voluntary benefits appeal to employers school year should be released
because “they’re able to give their employ- today. You’ll have until June 30, THURSDAY, OCTOBER 21
ees significantly more choice than they may 2023, to submit the form for fed- Get Smart About Credit Day is
have otherwise had, but there is a limited eral aid, but consider filling it out a good time to review your credit
out-of-pocket cost,” Jilek says. as soon as possible. Some states reports. The three major credit
Among the fastest-growing voluntary and schools award money on a bureaus—Experian, Equifax and
benefits are those that protect workers first-come, first-served basis or TransUnion—are offering free
against criminals seeking to steal their have deadlines earlier than the weekly credit reports through
personal information, Jilek says. Driven by federal deadline. April 20, 2022, at www.annual
a rise in unemployment fraud, 78% of em- creditreport.com. For advice
ployers surveyed will offer identity theft FRIDAY, OCTOBER 15 on whether you should take
protection by 2022, up from 53% currently Medicare open enrollment starts advantage of credit card issuers’
offering the benefit. Other high-growth today. Medicare Advantage or enticing offers, turn to page 67.
offerings include pet insurance, legal bene- Part D prescription drug plan EMMA PATCH
fits and critical illness coverage, which participants who aren’t happy
provides supplemental health insurance with the changes in their Annual
following, for example, a heart attack or Notice of Change have until * DEAL OF THE MONTH
cancer diagnosis. MICHAEL KORSH December 7 to shop for a new With the height of grilling
plan. Advantage enrollees can season over, retailers are
switch to original Medicare— interested in clearing their
and vice versa.
shelves for fall and winter in-
ventory. Labor Day sales may
TUESDAY, OCTOBER 19 have reduced the selection,
Today marks the 34th anniversary
but if you’re not picky, you
of the 1987 stock market crash,
ISTOCKPHOTO.COM (2)
when the Dow Jones industrial can get a good discount on
average plummeted nearly 23%. an outdoor cooker, says Julie
Historically, October is known Ramhold, consumer analyst
for unsettling stock market down- with DealNews.com.
16 KIPLINGER’S PERSONAL FINANCE 10/2021THE BEST
STEAKS
TASTE
BETTER
Omaha Steaks are carefully
hand-selected for quality and
consistency, then aged for tenderness
HUKKLSP]LYLKÅH^SLZZS`@V\^PSS[HZ[L
[OLKPɈLYLUJLPUL]LY`ZPUNSLIP[L
Get 4 Burgers &
Butcher’s Deluxe Pack 4 Chicken Breasts
4
4
Butcher’s Cut Filet Mignons (5 oz.)
Boneless Chicken Breasts (1 lb. total)
FREE
4 Boneless Pork Chops (6 oz.)
4 Omaha Steaks Burgers (5 oz.)
.V\YTL[1\TIV-YHURZ (3 oz.)
WRN(SS)LLM4LH[IHSSZ (12 oz. pkg.)
THE BEST STEAKS 4 Potatoes au Gratin (2.8 oz.)
OF YOUR LIFE OR *HYHTLS(WWSL;HY[SL[Z (4 oz.)
YOUR MONEY BACK 1 jar Signature Seasoning (1 oz. jar)
4 FREE Boneless Chicken Breasts (1 lb. total)
4 FREE Omaha Steaks Burgers (5 oz.)
66284WHC separately $299.92*
SPECIAL INTRODUCTORY PRICE
$ 13999
Take an EXTRA $20 OFF`V\YÄYZ[VYKLY/*
:H]PUNZZOV^UV]LYHNNYLNH[LKZPUNSLP[LTIHZLWYPJL7OV[VZL_LTWSHY`VMWYVK\J[HK]LY[PZLK3PTP[MYLL VaI\YNLYZHUKMYLLJOPJRLUIYLHZ[ZSI[V[HS^PSSILZLU[[VLHJO
ZOPWWPUNHKKYLZZ[OH[PUJS\KLZ :[HUKHYK: /HKKLKWLYHKKYLZZ>OPSLZ\WWSPLZSHZ[0[LTZTH`ILZ\IZ[P[\[LKK\L[VPU]LU[VY`SPTP[H[PVUZ-PYZ[6YKLY6ќLYPZHVUL[PTL\ZL
JVKL]HSPKVUS`VU[OLÄYZ[VYKLYVM VYTVYLWSHJLKI`UL^J\Z[VTLYZVYJ\Z[VTLYZ^OVZLSHZ[W\YJOHZL^HZTVYL[OHU KH`ZWYPVY[VJ\YYLU[VYKLYKH[L6US`VUL*VKLWLY
J\Z[VTLYJHUUV[ILJVTIPULK^P[OV[OLYVќLYZVYILHWWSPLK[VWYL]PV\ZZHSLZ.PM[*HYKZ>PUL.PM[)HZRL[Z3P]L3VIZ[LYZVY*\Z[VT*\[Z6THOH:[LHRZYLZLY]LZ[OLYPNO[[VHTLUK
[OLZL[LYTZHUKJVUKP[PVUZVY[V]HY`VYKPZJVU[PU\L[OLVќLY^P[OV\[WYPVYUV[PJL;OLJVKLJHUILYLKLLTLKVUSPULI`WOVULVYH[6THOH:[LHRZYL[HPSSVJH[PVUZ(SSW\YJOHZLZ
HJRUV^SLKNLHJJLW[HUJLVM;LYTZVM18 KIPLINGER’S PERSONAL FINANCE 10/2021
INVESTING
WE RANK
THE ONLINE
BROKERS
Our survey spotlights firms with great investment
choices, tools, advice and more. BY NELLIE S. HUANG
O
nline brokers are enjoying explosive growth as investors beat a path to
their virtual doors. In fact, 2020 was a record year: More than 10 million
new brokerage accounts were opened, many by first-time investors,
according to market research firm J.D. Power.
This year, many firms say they’re on track to surpass that. Over the first six months
of 2021, Fidelity opened an average of 40,000 new accounts every trading day—“a
company record,” says Scott Ignall, who heads Fidelity Investments’ brokerage business.
This moment has been building for some time. The seemingly unstoppable bull
market, commission-free trades and the pandemic lockdown all helped to break down
investing barriers, both financial and emotional. And the meme-stock frenzy enticed
hordes of eager investors to open accounts to trade stocks and options in volatile
ILLUSTRATIONS BY KOTRYNA ZUKAUSKAITE 10/2021 KIPLINGER’S PERSONAL FINANCE 19INVESTING
names such as GameStop and AMC Mobile apps received the greatest
Entertainment Holdings. emphasis in our rankings—20% of the
The influx of new investors has final score—because more customers
put a spotlight on finding a good are turning primarily to their mobile
brokerage firm. In this year’s annual devices to connect to their accounts.
online broker survey, we review nine. Tools—including charts, calculators
Five are large brokers that offer some- and educational resources—accounted
thing for almost every kind of inves- for 15% of the score, as did investment
tor: Charles Schwab, E*Trade, Fidelity, choices, advisory services and research.
Merrill Edge and TD Ameritrade. Fees and user experience were each
(Schwab’s 2020 acquisition of TD 10% of the total.
Ameritrade has not resulted in changes
to most of the services the firms offer, And the winner is… Fidelity, a strong
and it may not for at least another finisher in nearly every category, won
year.) The remaining four—Ally Invest, the top spot by a good margin. Runner-
Firstrade, Interactive Brokers and J.P. up Schwab fared well, thanks to strong
Morgan Self-Directed Investing—are finishes in the categories of research,
contenders in this area, but to some advisory services and mobile plat-
extent they target particular customers. form. Beyond the better-known bro-
We look at which types of investors kers, Ally deserves a shout-out for
may be best served by particular firms outranking Firstrade and J.P. Morgan
in “Find the Best Broker for You,” on overall with some offerings that fared
page 26. pretty well, such as its mobile app
and tools. To see how each firm per-
Clearing the hurdle. To be included in formed in every category, see the table
our survey, a firm must offer online on page 22.
trading in stocks, exchange-traded
funds, mutual funds and individual FEES & COMMISSIONS
bonds. That left out fast-growing Readers tell us that low fees and com-
brokerages such as Robinhood, M1 missions are the most important fea-
Finance and SoFi, which don’t offer ture in an online broker. But account
mutual fund and bond trading. But we fees and many trade commissions
briefly review those services, and two are things of the past.
others, in “Fledgling Firms That Fill a So, we dug deeper. Brokers have a
Niche,” on page 25. T. Rowe Price and duty to deliver the best possible execu- the interest rates on margin loans.
Vanguard declined to participate, as tion price to you for your trade, for in- Merrill Edge earned the best score
did two participants in last year’s sur- stance. We scrutinized how often each in this category. It does not accept
vey, TradeStation and Wells Trade. firm offers the so-called NBBO quote, payment for order flow (neither does
As in past years, we analyzed each which stands for national best bid and Fidelity; J.P. Morgan didn’t disclose
brokerage in seven areas, including offer and represents the best available this information). Merrill excelled, too,
commissions and fees, investment “ask” or offering price when you are on price improvement. The firm re-
options, advisory services, research, buying securities and the best avail- ported the highest cost savings on this
tools, and the nimbleness and func- able “bid” price when you are selling. front—an average improvement of
tionality of their mobile app. We also We asked about price improvement, $22.10 on big-company stock trades
measured what we call customer ser- which happens when firms improve of 1,000 shares. Schwab, with $18.78
vice, which graded the responsiveness on the NBBO and execute your orders in price improvement, and TD, with
of the firm at its “touch points”—chat, at even better prices, and we asked $18.70, came next. Ally and J.P. Morgan
e-mail and phone—and included a test whether firms accept payment for both declined to answer this question.
of each firm’s customer service by a order flow, which can pose a conflict Most firms are competitive on fees
group of Kiplinger reporters. Aside of interest because it is compensation to trade options and bonds. But Firs-
from customer service, each category that a brokerage receives for funneling trade stands out because option trading
score was based primarily on data pro- trades to a certain market maker. We is free—there’s no commission and no
vided to us by the brokerages, which also looked into the fees charged for additional fee per option contract. On
we checked to the best of our abilities. bond and options trading, as well as margin trading, in which you borrow
20 KIPLINGER’S PERSONAL FINANCE 10/2021trading of ETFs is typically a given.)
Access to foreign stock exchanges
helped our top three finishers, too.
We didn’t give a lot of weight to this
feature, but Fidelity, Schwab and In-
teractive Brokers each offer trading
on exchanges in dozens of developed
and emerging markets, from Austria
to Australia to Japan to Lithuania.
Fidelity shone in other areas, too,
which propelled it to the top of this
category. The firm’s municipal bond
offerings exceeded those of its peers.
And Fidelity customers had access
to more than 250 initial public stock
offerings in the 18-month period be-
tween the start of 2020 and June 2021,
including Rocket Companies, the firm
behind Rocket Mortgage, and Pactiv
Evergreen, a maker of sustainable food
packaging. Merrill came close, with
166 deals available over the period. But
the IPO offerings at E*Trade, Schwab
and TD Ameritrade numbered in the
dozens. And Ally, Firstrade, Interac-
tive Brokers and J.P. Morgan didn’t
offer IPO deals to customers at all.
MOBILE APPS
The competition was so close in this
category that the winner, E*Trade,
won by a margin of six hundredths
of a point, thanks in part to the slightly
more robust charting capabilities of
against your portfolio to trade, Inter- ing stocks, ETFs, mutual funds, bonds its mobile app. Fidelity finished close
active Brokers has everyone beat. The and more, to fare well in this category. behind, and TD Ameritrade, Merrill
firm charges a flat 2.59% interest rate Fidelity came in first, Interactive Bro- Edge and Interactive Brokers were
in its “Lite” service for retail investors kers was second and Schwab, third. hot on its heels.
no matter how big or small the balance. The ability to buy a portion of one The results point to how much we
(Its “Pro” service, for sophisticated, share of stock, or fractional trading, live on our smartphones these days.
active traders, charges even less.) At was a driving factor in the final scores. Merrill Edge said that roughly half of
other firms, the higher the margin Fidelity, Interactive Brokers and its customers use the firm’s mobile app
account balance, the lower the fee. But Schwab are the only firms we sur- exclusively. At Fidelity, 52% of all cus-
none of the other firms could compete veyed that offer investors the ability tomer interactions occur via its app.
with Interactive Brokers at any bal- to buy stock slices. But while Fidelity Every company’s mobile app allows
ance level. (Ally came closest, with a and Interactive Brokers offer partial- you to trade stocks, ETFs and mutual
3.25% interest rate on margin balances share trading in thousands of stocks, funds, pull up research reports, view
of $1 million or more.) Schwab’s program is limited to the detailed data on securities, and review
500-odd stocks in the S&P 500 index. your portfolio’s performance. But
INVESTMENT CHOICES Fidelity and Interactive even offer some of the apps aren’t as loaded with
If a brokerage doesn’t offer access to fractional trading in ETFs, giving features as others. Only five firms,
a broad range of investments, little each of them an edge. (This is outside including E*Trade, Merrill Edge and
else matters. A firm must have ample of each brokerage firm’s digital ad- Schwab, allow you to measure your
offerings for each type of asset, includ- visory service, in which fractional portfolio’s performance against a
10/2021 KIPLINGER’S PERSONAL FINANCE 21INVESTING
benchmark, for instance. (Merrill educational videos embedded within in the local branch office for face-to-
lets you choose among a whopping the app—in other words, to watch a face consulting.
35 indexes.) And not all offer tax-lot video, you stay in the app and aren’t Schwab and Fidelity’s automated
information on holdings on the mobile redirected to a mobile browser or to services stood above the others as
app—the ones that do include E*Trade, YouTube. That’s a plus, in our view. well. Fidelity’s robo adviser, Fidelity
Fidelity, J.P. Morgan and Schwab. That Go, has a super-low, $10 minimum, a
data can be helpful when you make a ADVISORY SERVICES flat 0.30% management fee and port-
trade. (This service is set to debut at More investors want advice and are folios with no expense ratio. Schwab’s
Merrill and Ally later this year.) willing to pay for it. Fortunately, fi- Intelligent Portfolios service doesn’t
But the look and feel of these apps nancial services firms are delivering, charge a management fee at all, and
vary, and their beauty rests in the eye with low-cost, low-minimum robo it’s one of just two digital adviser ser-
of the beholder. Sophisticated inves- advisory services and plenty of high- vices to offer tax-loss harvesting, the
tors, for instance, may appreciate that end options, too, with personalized practice of selling some investments
on a tablet, Interactive’s app opens portfolios filled with a variety of assets at a loss to offset gains realized by
with multiple windows. And E*Trade that are professionally managed. selling others at a profit. (E*Trade’s
recently overhauled its app to make That said, firms that offer a wide robo offers tax-loss harvesting in its
it “easier than ever to invest, trade range of advisory services did best here. tax-efficient accounts.)
and save.” It has a nifty “dark” view Fidelity tops this category; Schwab Interactive Brokers, E*Trade and
that we found easy on the eyes. But came in second. They each offer access J.P. Morgan get honorable mention in
experienced investors might find it to extensive advisory services with a this category for their low-fee hybrid
a little bare. Ally’s mobile app has a variety of different outside firms. And services, which combine a robo with
black-screen view, too. Finally, TD’s an army of certified financial planners a little human touch. Ally offers a com-
mobile app offers a smorgasbord of is just a phone call away—or available petitive automated service, with low
The Rankings
HOW THE BROKERS SCORE IN EVERY CATEGORY
The overall score depends on the weight assigned to each of the advisory services accounted for 15%; and mobile apps received the
seven categories. This year, commissions & fees and customer ser- greatest weight, 20%, because more customers are turning primarily
vice represented 10% each; tools, research, investment choices and to their mobile devices to connect to their accounts and to trade.
Overall Commis- Invest-
score sions ment Mobile Advisory Customer
Rank Broker (1–100) & fees choices app services Tools Research service
Fidelity
1 fidelity.com
91.8 2 1 2 1 1 3 8
Charles Schwab
2 schwab.com
83.0 5 3 6 2 4 1 3
E*Trade
3 etrade.com
76.1 7 4 1 5 2 2 5
Merrill Edge
4 merrilledge.com
73.4* 1 6 4 6 5 4 1
TD Ameritrade
5 tdameritrade.com
73.4* 6 5 3 2 6 5 4
Interactive Brokers
6 interactivebrokers.com
71.4 4 2 5 4 3 7 9
Ally
7 ally.com/invest
48.9 9 7 7 7 7 8 6
J.P. Morgan Self-Directed Investing
8 chase.com/self-directed
46.3 8 9 8 8 8 6 7
NA Not available. *Test account not provided.
Firstrade
9 firstrade.com
38.7 3 8 9 9 9 9 2
*Merrill Edge, with an overall score of 73.38, inched past TD Ameritrade, which finished with an overall score of 73.37.
22 KIPLINGER’S PERSONAL FINANCE 10/2021INNOVATIVE WAYS TO HELP GENERATE
INCOME FROM YOUR NEST EGG
7KH'HƮQLWLYH*XLGHWR5HWLUHPHQW,QFRPHprovides simple
DQGHƬHFWLYHLQVLJKWV\RXFDQXVHQRZWRPDNHWKHPRVW
RI\RXUUHWLUHPHQWSRUWIROLR*HWLWIRU)5(( DQGOHDUQ
VHYHQUHWLUHPHQWLQFRPHVWUDWHJLHV\RXFDQVWDUWXVLQJ
LPPHGLDWHO\DVZHOODVDGYLFHRQKRZ\RXULQYHVWPHQWV
FDQRXWSDFHLQưDWLRQDQGZD\VWRPDQDJH\RXUUHWLUHPHQW
ZLWKGUDZDOVVR\RXUQHVWHJJFDQODVWDOLIHWLPH
If you have a $500,000+ portfolio,
CALL 866-289-3321
or text** “QUICK” to 68658
or visit FisherRetire.com/Quick for your FREE* guide.
*No cost and no obligation beyond completing a short request form and brief survey.
7HUPV &RQGLWLRQVDWƮVKHULQYHVWPHQWVFRPHQXVWH[WWHUPVDQGFRQGLWLRQV0HVVDJHDQGGDWDUDWHVPD\DSSO\
3OHDVHVHHRXU3ULYDF\3ROLF\DWƮVKHULQYHVWPHQWVFRPHQXVSULYDF\
©2021 Fisher Investments. 5525 NW Fisher Creek Drive, Camas, WA 98607.
Investments in securities involve the risk of loss. Past performance is no guarantee of future returns.INVESTING
fees and minimums, but its score suf- for preferred stocks, for example. in third. But the firm offers plenty
fered in this category because it doesn’t Firstrade suffered in part because it of third-party reports on stocks, in-
offer a hybrid service. And Firstrade doesn’t allow customers to measure cluding, for example, reports from
doesn’t offer an advisory service at all, portfolio performance against a bench- 11 research firms on Apple and 10 on
which hurt its ranking in this category mark or offer daily updates on overall Goldman Sachs. And the firm’s “View-
and overall in the survey. portfolio performance. points” reports offer regular stock and
Finally, a note about TD Ameritrade: TD Ameritrade has a middling bond market outlooks, as well as fixed-
Unlike the rest of the firm’s brokerage showing in this category. But the income investing ideas.
services, its automated advisory prod- firm is competitive on some measures, Again, size makes a difference. The
uct, Essential Portfolios, is already in including educational webinars, tech- smaller outfits—Ally, Firstrade and
an early stage of merging with Schwab. nical indicators and charting. J.P. Morgan—can’t match their bigger
Interested investors are directed to brethren when it comes to indepen-
Schwab’s robo, Intelligent Portfolios. RESEARCH dent research. Interactive Brokers
That’s why TD receives the same score Investors today expect abundant re- offers a surfeit of choices, but it has
as Schwab in this category. search from online brokers, for every- no stock or market research reports
thing from market outlooks to bond, from an independent, established
TOOLS stock, ETF and mutual fund analysis. investment bank, nor any in-depth
Calculators, charts and screens for But as the scores in this group show, fundamental mutual fund analysis.
stocks, ETFs and mutual funds help size matters: The big brokers do a
investors put their money to work in better job at this than the small ones. CUSTOMER SERVICE
smart ways. Fidelity trumps the com- Schwab outperformed the others in Can you talk to a certified financial
petition here. The race for second was this category. In some areas, Schwab planner if you need one? Get an answer
tight—E*Trade, Interactive Brokers doesn’t have the most research. Third- to a question via chat or e-mail in a
and Schwab finished second, third place finisher Fidelity, for instance, reasonable amount of time? Reach
and fourth, respectively, but they were offers research from 35 different a live representative on a customer
separated by fractions of a point. firms—more than any other brokerage service phone line? Does the rep
Fidelity offers more than 30 savings, we surveyed—while Schwab’s roster answer your question correctly and
tax and retirement calculators. The of research firms numbers just under completely? These are just a few of the
firm also excels in screening tools. Its 20. But Schwab’s research resources areas we scrutinized in this category.
stock screens include 162 different cri- cover more ground, including market Merrill Edge emerged head and
teria, and its website offers nearly as insights and analysis, bond market shoulders above its peers. The average
many data points for each of its fund reports, and audio webcasts. wait time for a phone rep: less than
and ETF screening tools. No other In addition, Schwab offers a bounty 30 seconds (J.P. Morgan reports the
firm could match that in total, across of recommended fund and stock lists, same wait time). The average reported
the board, but Schwab and Interactive which can be a rich trove of ideas. The wait time among all firms: 2.5 minutes.
Brokers came close, which helped lift numerous stock lists include large- E-mail and chat response times at
their rankings in this category. One company and small-company stocks, as Merrill are also fast relative to peers.
caveat: Most of Interactive’s tools are well as favored stocks in each sector, Firstrade was a surprise second-
available only on its Trader Worksta- among others. Schwab says it “uses place finisher. The firm’s representa-
tion platform, which must be down- an objective and disciplined approach” tives aren’t the fastest responders
loaded; the tools on the firm’s website to select stocks that are most likely to on the phone or with chat or e-mail,
are too simple to be of much use. outperform the market. but they aren’t the slowest, either.
Considering just calculators, E*Trade comes in a solid second in And they earned a solid score on our
E*Trade takes the cake, with dozens this category, with similar attributes customer service phone line test. Rep-
of interactive calculators and evalua- to Schwab. Morgan Stanley completed resentatives were, for the most part,
tors, including 15 retirement- and its acquisition of E*Trade last year, so clear, informative and accurate when
IRA-related calculators alone. customers now have unfettered access they answered questions on the phone.
The laggards in the tools category to this blue-chip investment bank’s The influx of new accounts has wal-
are Firstrade and J.P. Morgan. Both research on stocks and markets. But loped the customer service side of
offered fewer how-to webinars and Schwab bested E*Trade in bond and nearly every broker’s business. Many
in-person events on investing basics or stock market outlook reports. firms, including Ally and Fidelity, have
specific strategies than the standouts Fidelity’s mutual fund research hired throngs of customer service reps
in this category. J.P. Morgan doesn’t doesn’t match the level of Schwab and to help with the flood of calls. And
offer a bond-ladder tool or a screener E*Trade, which is one reason it came warnings about long wait times were
24 KIPLINGER’S PERSONAL FINANCE 10/2021You can also read
