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Online brokerage review: T. Rowe Price

T. Rowe Price is an online broker that is part of a wide-ranging financial services organization that offers an extensive range of mutual funds and individually-managed portfolios. The firm placed around the middle of the pack in a recent MoneyRates.com survey of best online brokers, but often the best fit for any given client depends on what that client is looking for from a broker.

Specifically, T. Rowe Price was tied for 11th place out of 19 online brokers studied. However, it is worth noting that the firm did earn above-average rankings in two of the four categories examined, so it does have strengths that will appeal to some investors.

Who is a good fit for T. Rowe Price?

T. Rowe Price fees

To get the bad news out of the way first, T. Rowe Price had the highest commissions for ordinary stock trades in the MoneyRates.com study. These commissions start at $19.95 per trade, which is more than three times the average commission of $6.05 found in the study. T. Rowe Price's commission rate drops to $9.95 for customers who place more than 30 trades per year or who have $250,000 or more with the firm, but that is still on the expensive side.

On the other hand, T. Rowe Price had a lower margin interest rate than most of the other brokerage firms studied, so it could be a relatively cost-effective solution for investors who make heavy use of portfolio leverage.

It should also be noted that T. Rowe Price offers a full range of mutual funds and managed account services. Their emphasis is on active, fundamental investment management, which stands out at a time when much of the industry offers passive or quantitative strategies. Fundamental investment strategies may not do as well in momentum-driven markets, but they are designed to fare better when market valuations return to normal.

Investors looking for professional asset management

Given this combination of high commissions with a strong emphasis on managed investments, T. Rowe Price may be a better fit for investors who are looking to have the bulk of their assets professionally managed, while perhaps only dabbling occasionally in self-directed trading.

Other considerations

T. Rowe Price should be lauded for having one of the cleanest disclosure records of all the brokerage firms in the MoneyRates.com study. The firm's current brokerage registration dates back to 1980, and in all that time, it has had just one regulatory incident and three client arbitration cases. That gave it the third-lowest frequency of disclosure events out of the 19 brokers in the study, and the two brokers with less frequent disclosures have not been around for nearly as long. In an industry where ethical problems crop up all too often, this strong compliance record is a very positive attribute.

Because of its heavy emphasis on discounted commissions, much of the online brokerage industry is geared to appeal to high-volume traders, often using technical or speculative investment techniques. With its higher commissions and fundamental investment approach, T. Rowe Price is oriented a little differently, and overall should appeal more to people looking for long-term, professionally-managed investment approaches.

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