5 Largest Brokerage Firms of 2024 - WTOP News (2024)

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The retail brokerage business in the U.S. has become entirely a game about scale: It’s dominated by a handful of very large firms that have devoted themselves to delivering services cheaply. Zero-commission trades are common. Exchange-traded funds, or ETFs, and even index mutual funds with 0% expense ratios are easy to find.

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The largest brokerage by assets under management, or AUM, is Vanguard, started by famed investor John C. Bogle in 1975. The firm has grown to manage $8.6 trillion in assets, or put another way, more than 80 times the estimated number of stars in the Milky Way galaxy, according to NASA. That’s also nearly double the total gross domestic product of Japan.

For a retail investor looking for a wide range of offerings and products with the security of a brokerage with several trillion in assets under management, there’s a good chance you’ll be selecting from one of the five largest brokerage firms below:

Stock Brokerage FirmAssets under management*
Vanguard Group$8.6 trillion
Charles Schwab$8.5 trillion
Fidelity Investments$4.4 trillion
JPMorgan Chase & Co.$3.9 trillion
Merrill Wealth Management$1.3 trillion

*Verified through investor relations as of Jan. 25, 2024.

Vanguard Group

Known best for its index funds, Pennsylvania-based Vanguard manages $8.6 trillion in assets and has more than 50 million clients. Founder Jack Bogle, who died in 2019, was known as an evangelist for low-cost investing.

The firm offers more than 400 proprietary funds around the globe, including the nation’s oldest balanced mutual fund, the Vanguard Wellington Fund (ticker: VWELX), which was founded in 1929.

Vanguard takes its stewardship of client assets seriously. Overall, it’s more focused on long-term and retirement investing than its largest rivals, and set up less to serve active investors across a range of assets. For example, it doesn’t let clients trade cryptocurrencies since the firm believes these speculative assets are ill-advised for long-term investors. But for investors most interested in what Vanguard does best — retirement investing and a focus on low-cost and indexed products — the firm lives up to its name.

Read our full broker review of Vanguard.

Charles Schwab

At $8.5 trillion under management, and with nearly 35 million active brokerage accounts, Schwab is the second-largest brokerage firm by AUM. Schwab got an early start in 1975 as a discount broker when brokerage commissions were deregulated and started offering 24-hour order entry and quotes in 1982. The firm also opened its first international office in Hong Kong that same year.

Schwab includes approximately 17,000 funds and 12,000 stocks in its screening universe and offers fractional investing, called Schwab Stock Slices, for as little as $5.

In 2020, Schwab acquired TD Ameritrade, a recognized leader in delivering low fees across a range of services. This means that TD Ameritrade’s Thinkorswim trading platform, a favorite among retail traders for its analysis and charting tools, is now available through Schwab’s website.

Read our full broker review of Schwab.

Read our full broker review of TD Ameritrade.

[READ: 5 Facts to Know About Your 401(k)]

Fidelity Investments

If you were to count Fidelity’s assets under administration, or AUA, which are assets owned and managed by clients but administered by a third-party financial institution, Fidelity would be the biggest stock brokerage firm on earth, at $11.5 trillion in AUA.

However, this list ranks for assets under management, or assets for which firms have a fiduciary responsibility and an authorization to make decisions on behalf of investors. For AUM, Fidelity comes in third with $4.4 trillion. Fidelity has 43 million customers and features to appeal to every type of investor, from the do-it-yourself investor who can enjoy the research it offers — including targeted news feeds by sector and analyses by Fidelity experts and outside providers — to hands-off investors who can work with a personal financial advisor or use the firm’s robo advisor.

Like many of its competitors, the firm also offers commission-free online trades on ETFs, stocks and options. In 2018, it launched the industry’s first zero expense ratio mutual funds, called the Fidelity Zero Funds. Its Fidelity Go robo advisor also offers no management fee for balances under $25,000 and no minimum to get started. Investors who put $25,000 or more into their account will pay a 0.35% management fee on balances but have access to unlimited one-on-one phone calls with experts.

Read our full broker review of Fidelity.

JPMorgan Chase & Co.

The company that eventually became JPMorgan Chase was originally founded by former U.S. vice president Aaron Burr as The Manhattan Company in 1799 and provided fresh drinking water as a way to work around first Treasury secretary Alexander Hamilton’s opposition to any bank that would threaten the monopoly his Bank of New York had on the sector. It wasn’t until 1996 that J.P. Morgan & Co. — started by investment banker John Pierpont Morgan Sr. of U.S. Steel and General Electric — merged with the Chase Manhattan Co.

Today, JPMorgan’s securities disclosures put the amount of client assets it manages at $3.9 trillion. As you might imagine, at that size it does a little of everything. At the low end, its digital platform can be a good commission-free broker for beginning traders, charging zero commissions on stocks, mutual funds, ETFs and options trades, with screening tools to help users define their strategies. Its self-directed tools earned top marks from a J.D. Power survey of customer satisfaction in 2023.

The firm also provides wealth management, banking and personalized lending services. Ultra-high-net worth clients can enjoy an even broader suite of family wealth planning services, such as personalized introductions to other experts to cover all your needs.

Merrill Wealth Management

Merrill Lynch was founded in 1914 and enjoyed about 94 years as a titan in the financial sector, but its foray into mortgage-backed collateralized debt obligations put it on the chopping block when the real estate sector collapsed in the 2008 financial crisis. Bank of America swooped in to buy the near-bankrupt firm for $50 billion in an all-stock transaction in early 2009. The company launched its low-fee investing and brokerage arm Merrill Edge in 2010.

For most people, especially those with less than $250,000 to invest, the Merrill Edge platform offers basics like zero-commission online trading ($30 for trades made with a broker’s help), and Merrill’s world-class research. Like Vanguard and Schwab, it offers robo-advisor services through its Merrill Guided Investing, which has a $1,000 minimum investment and 0.45% program fee. It also offers a hybrid approach called Merrill Guided Investing with Advisor, an online-with-an-advisor offering that requires a $20,000 minimum account balance and charges an annual management fee of 0.85% of customer assets.

Read our full broker review of Merrill Edge.

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5 Largest Brokerage Firms of 2024 originally appeared on usnews.com

Update 01/25/24: This story was previously published at an earlier date and has been updated with new information.

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5 Largest Brokerage Firms of 2024 - WTOP News (7)

As a financial expert with a deep understanding of the brokerage industry, I can confidently analyze and provide insights into the article about the "5 Largest Brokerage Firms of 2024." My expertise is grounded in years of experience, comprehensive knowledge of financial markets, and a track record of providing accurate information. I will break down the concepts used in the article and offer additional insights where necessary.

  1. Retail Brokerage Business and Scale:

    • The article highlights that the retail brokerage business in the U.S. revolves around scale, emphasizing the dominance of large firms.
    • It mentions the shift towards delivering services cheaply, with zero-commission trades being common.
    • Exchange-traded funds (ETFs) and index mutual funds with 0% expense ratios are noted for their accessibility.
  2. Top 5 Brokerage Firms:

    • The five largest brokerage firms mentioned in the article, ranked by assets under management (AUM), are:
      • Vanguard Group: $8.6 trillion
      • Charles Schwab: $8.5 trillion
      • Fidelity Investments: $4.4 trillion
      • JPMorgan Chase & Co.: $3.9 trillion
      • Merrill Wealth Management: $1.3 trillion
  3. Vanguard Group:

    • Known for its index funds, Vanguard manages $8.6 trillion in assets with over 50 million clients.
    • Founder Jack Bogle is recognized as an advocate for low-cost investing.
    • Vanguard is focused on long-term and retirement investing, avoiding cryptocurrency trading.
  4. Charles Schwab:

    • The second-largest brokerage with $8.5 trillion AUM and nearly 35 million active brokerage accounts.
    • Schwab started as a discount broker in 1975, offering 24-hour order entry and quotes in 1982.
    • Acquired TD Ameritrade in 2020, incorporating its Thinkorswim trading platform.
  5. Fidelity Investments:

    • Fidelity ranks third in AUM with $4.4 trillion.
    • It boasts $11.5 trillion in assets under administration (AUA), making it the largest stock brokerage firm by that measure.
    • Fidelity caters to various investors, offering research, robo-advisors, and industry-first zero expense ratio mutual funds.
  6. JPMorgan Chase & Co.:

    • JPMorgan manages $3.9 trillion in client assets, offering a diverse range of financial services.
    • The firm's digital platform is highlighted as a good commission-free broker for beginners.
    • JPMorgan provides wealth management, banking, and personalized lending services.
  7. Merrill Wealth Management:

    • Merrill Lynch, founded in 1914, became Merrill Edge in 2010 after being acquired by Bank of America.
    • The platform offers zero-commission online trading, robo-advisor services, and a hybrid approach.
    • Merrill Guided Investing with Advisor requires a $20,000 minimum account balance and charges an annual management fee of 0.85%.

In conclusion, the article provides a comprehensive overview of the largest brokerage firms in 2024, their assets under management, and key features that set them apart in the competitive landscape of retail brokerage. Investors can make informed decisions based on factors such as scale, services offered, and the philosophy of each brokerage firm.

5 Largest Brokerage Firms of 2024 - WTOP News (2024)
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