Firstrade versus Betterment brokerage firm comparison: IRA, fees, commissions, benefits, pros and cons. Which broker to choose?

Overview of Betterment and Firstrade

Firstrade and Betterment provide low-cost trading with minimal services. Despite this one similarity, there are many differences between the two. Here’s what we found:

Range of Investments

Firstrade customers can buy and sell equities, exchange-traded funds, closed-end funds, options, mutual funds, and bonds. OTC stocks are also on tap. Betterment is a robo advisor, which means it offers low-cost ETF’s and nothing more.

Firstrade is our pick in this category.

Trading Technology

During our investigation, we didn’t find a lot of trading tools on the Betterment website. There are some tools for portfolio management; but that’s about it for this robo advisor. On the plus side, the site is user-friendly.


Betterment vs Vanguard


Moving to Firstrade, we find a marked improvement. The broker-dealer has a trade bar on its site; it can submit orders for equities and options. A minimal amount of security research is also possible on the bar.


Firstrade


Shifting to the website, we find the broker’s order form for fixed-income securities and mutual funds. They are easy to use. Other highlights include a very good customer service section and advanced charting tools. Several option tools are available, and these provide trading in calls, puts, and multi-leg strategies.

Firstrade wins the second category.

Promotions

Firstrade: $0 commissions + up to $200 in transfer fee rebates.

Betterment: none right now.


Mobile Apps

Betterment’s app functions on Apple and Android phones. During our research, we didn’t find a lot of features on it. The basic portfolio management tools from the website are on the broker’s mobile platform. Missing are many nice functions like charting, mobile check deposit, video news, option chains, and security research.

At Firstrade, we do find very good charting. A graph can be displayed in horizontal mode (currently, just on Apple devices). There are multiple display styles; these include candlestick and Open-High-Low-Close bars. There are several technical studies and some amount of customization, such color changes.


Firstrade mobile app


The trading ticket on Firstrade’s software delivers market, limit, trailing, and stop orders. The platform allows an order to be sent during extended hours only, a nice feature.

Once again, Firstrade wins the category.

Financial Education and Research

As a robo-only advisor, Betterment doesn’t provide any self-directed accounts. As such, there are no learning materials to report on. There are also no research tools, like an equity screener or an ETF map. Also missing on the broker’s site is a learning center for general investing. We did find portfolio analysis tools. These display target percentages for asset classes.

On the Firstrade site, there is an Education Center. This section offers (fairly short) videos and articles that cover many investment issues. A few longer webinars are available on options trading. For example, we found one 40-minute webinar that described how to trade debit spreads. The articles and videos discuss topics such as the history of ETF’s and how to use margin.

Stock profile pages at Firstrade use data courtesy of Morningstar. We found information on earnings releases, dividend history, ownership, return history, valuation, and Morningstar analysis (at no cost).

Screeners on the Firstrade site are able to look for ETF’s, mutual funds, bonds, and stocks based on a wide variety of criteria. We found them quite easy to use.

Firstrade is the winner again.

Portfolio Management

As already mentioned, Betterment is primarily a robo advisor. It does offer a second management package that combines digital advisory services with access to a human advisor with a CFP® certification. This option does cost more (0.40% versus 0.25%); and a very steep $100,000 is required.

Firstrade offers nothing here and loses its first category.

Other Services

Both firms in our survey offer Individual Retirement Accounts (IRA’s). Firstrade offers a traditional Dividend Reinvestment Program (DRIP); while Betterment uses cash dividends to buy shares of underperforming assets within a portfolio.

Firstrade offers an automatic investing service that allows customers to set up recurring deposits into mutual funds. Betterment has a similar service for its low-cost ETF’s.

Overall, it’s pretty even here.

Our Recommendations

For beginners, we are able to recommend either broker. Betterment would be good for new investors who aren’t interested in learning very much. Traders who want to learn so they can do their own trading in the future should choose Firstrade.

For mutual fund and stock traders, we have no choice but to recommend Firstrade as Betterment doesn’t offer these products.

For ETF’s, we pick Firstrade because it offers a larger selection. For retirement and long-term investing, we again lean towards Firstrade. With stocks and mutual funds, the company makes more sense to us.

Promotions

Firstrade: $0 commissions + up to $200 in transfer fee rebates.

Betterment: none right now.


Firstrade vs Betterment - Judgment

Betterment’s robot doesn’t help it overcome Firstrade, who is the overall better firm.


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