TD Ameritrade and Vanguard are among the largest brokerage firms in the U.S.—but the similarities stop there. Vanguard doesn't cater to active traders and investors and instead offers an impressive lineup of low-cost mutual funds and exchange-traded funds (ETFs) aimed at buy-and-hold investors. 

  • Account Minimum: $0
  • Fees: $0/stock and ETF trade, $0 plus $1 per contract for options
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  • Account Minimum: $0
  • Fees: Free stock, ETF, and per-leg options trading commissions in the U.S., as of October 3rd, 2019. $0.65 per options contract.
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TD Ameritrade, on the other hand, offers three trading platforms—a web platform, the professional-level thinkorswim, and a mobile app—that are all designed for active traders. At the same time, TD Ameritrade boasts ample educational content to help new investors become more confident and versatile. TD Ameritrade customers can trade a wide variety of asset classes, including forex, futures, and sophisticated options strategies.

In our 2020 Best Online Brokers reviews, TD Ameritrade earned higher scores than Vanguard in every category except Best for International Trading. Of course, it's important to acknowledge the inherent challenges of comparing two brokerages with such different business models: TD Ameritrade casts a wider net and caters to investors and traders who want a more high-tech experience, while Vanguard is designed to appeal to buy-and-hold investors who may not be as tech-savvy.

On Nov. 25, 2019, Charles Schwab announced a buyout of TD Ameritrade's online brokerage. The transaction itself is expected to close in the second half of 2020, and in the meantime, the two firms will operate autonomously. Schwab expects the merger of its platforms and services to take place within three years of the close of the deal.

Usability

We found it's easier to open and fund an account at TD Ameritrade. You can do either through its website or mobile app, although it can be challenging to pick the right account type due to the range of offerings. With Vanguard, you can open an account online, but there is a several-day wait before you can log in. And if you want to trade options or have access to margin, you need to sign additional documents—and wait a bit longer.

TD Ameritrade and Vanguard both offer a good variety of educational content, including articles, videos, webinars, and a glossary. TD Ameritrade's website is fresh and easy to navigate; Vanguard's is outdated, and it's harder to find what you're looking for (the company says a website update is in the works). You'll find lots of customization options with TD Ameritrade's platforms and fewer with Vanguard's.

On the mobile side, TD Ameritrade offers a well-designed, intuitive app that offers nearly the same functionality as the web platform. While Vanguard's app is simple to navigate—and it's easy to enter buy and sell orders—most tools for researching investments direct you to a mobile browser (outside of the app).

Trade Experience

Desktop Experience

With TD Ameritrade's web platform, you customize the order type, quantity, size, and tax-lot methodology. Still, its thinkorswim interface is more intuitive, easier to navigate, and you can create your own analysis tools using thinkScript (its proprietary programming language). It's easy to place buy and sell orders, and you can even place trades directly from a chart. Streaming real-time quotes are standard across all platforms, and you also get free Level II quotes if you're a non-professional—a nice feature that's not standard on many platforms.

Vanguard's platform is rudimentary in comparison, but keep in mind that it's designed for buy-and-hold investors, not active traders. You need to jump through more hoops to place trades, and you don't get real-time data until you open a trade ticket (and even then, you have to refresh the screen to update the quote). Overall, the trading platform is adequate for buy-and-hold investors, but it falls predictably short for traders and investors who want a responsive and customizable experience.

Mobile Experience

TD Ameritrade supports two mobile apps: the beginner-friendly TD Ameritrade Mobile App and thinkorswim Mobile—designed for active traders. Both are robust and offer a great deal of functionality, including charting and watchlists. Streaming real-time data is included, and you can trade the same asset classes on mobile as on the other platforms.

Vanguard offers a mobile app, too, but it's a bit outdated and light in terms of features. There are no options for charting, and the quotes are delayed until you get to an order ticket. Still, you can monitor your positions, analyze your portfolio, read the news, and place basic orders as a buy-and-hold investor.

Range of Offerings

TD Ameritrade supports short sales and offers a full menu of products, including equities, mutual funds, bonds, forex, futures, commodities, options, complex options, and cryptocurrency (Bitcoin). Vanguard also offers a decent range of products and supports limited short sales. With Vanguard, you can trade stocks, ETFs, and some of the fixed-income products online, but you need to place broker-assisted orders for anything else.

Order Types

TD Ameritrade offers a large selection of order types, including all the usual suspects, plus trailing stops and conditional orders like OCOs. There are no restrictions on order types on the mobile platform, and you can stage orders for later entry on all platforms. Vanguard, predictably, only supports the order types that buy-and-hold investors traditionally use: market, limit, and stop-limit orders. You can't stage orders for later entry; however, you can select specific tax lots (including partial shares within a lot) to sell.

Trading Technology

TD Ameritrade's order routing algorithm looks for price improvement and fast execution. The company publishes price improvement statistics that show most marketable orders get slightly more than 1½ cents per share ($0.015) in price improvement, on average. TD Ameritrade receives some payment for order flow (PFOF) but claims its order execution engine does not prioritize it. The company received an average of $0.0012 per share in payment for order flow in the third quarter of 2019. 

Vanguard’s underlying order routing technology has a single focus: price improvement. The company reports price improvement on stock orders of $0.85 per share—a very high figure that we couldn't independently verify. Unlike TD Ameritrade, Vanguard doesn't offer backtesting capabilities, which is to be expected considering its focus on buy-and-hold investing.

Costs

TD Ameritrade offers $0 commissions for online equity, options, and ETF trades for U.S.-based customers (there's a $0.65 per contract option fee). At Vanguard, you can trade stocks, options, and ETFs for free (with a $1 per contract option fee). 

Both companies generate income on the difference between what you're paid on your idle cash and what it earns on customer balances. TD Ameritrade says it doesn't explicitly route for payment for order flow (PFOF), but it accepts, on average, $0.0015 per share on equity orders and $0.51 per contract for options orders. Vanguard doesn't participate in PFOF for equity transactions, and it accepts $0.18 per options contract, which is very low.

Neither broker has a stock loan program for sharing the revenue it generates from lending the stocks held in your account to other traders or hedge funds (usually for short sales).

Research Amenities

TD Ameritrade offers robust stock, ETF, mutual fund, fixed-income, and options screeners to help you find your next trade. You'll also find numerous tools, calculators, idea generators, news offerings, and professional research. Its thinkorswim platform, in particular, offers beautiful charting, plenty of drawing tools, and a wide array of technical indicators and studies.

Vanguard offers basic screeners for stocks, ETFs, and mutual funds. Fixed-income products are presented in a sortable list. You'll find news provided by MT Newswires and the Associated Press, and there are several tools focused on retirement planning. Charting is limited, and no technical analysis is available—again, not surprising for a buy-and-hold-centric broker.

Portfolio Analysis

Both brokers' portfolio analysis offerings provide access to buying power and margin information, plus unrealized and realized gains. You can access tax reports (capital gains), see your internal rate of return (IRR), and view aggregate holdings from outside your account. Only TD Ameritrade offers a trading journal.  

Education

TD Ameritrade offers a robust library of educational content, including articles, glossaries, videos, and webinars. The company averages 500+ webinars a month and offers more than 1,500 live events each year. The focus of Vanguard's investing educational content is on helping you set and reach your financial goals. Most content is in the form of articles—about 250 new pieces were added in 2019.

Customer Service

TD Ameritrade offers 24/7 phone support and chatbots on Twitter, Facebook Messenger, Apple Business Chat, and WeChat (in Asia). Live chat is supported on its app, and a virtual client service agent, Ask Ted, provides automated support online.

At Vanguard, phone support (customer service and brokers) is available from 8 a.m. to 8 p.m. (Eastern) Monday through Friday. Live chat isn't supported, but you can send a secure message via the website. Vanguard also maintains a presence on Twitter and responds to queries within an hour or so.

Security

Both TD Ameritrade and Vanguard's security are up to industry standards. You can log into either broker's app with biometric (face or fingerprint) recognition, and both brokers protect against account losses due to unauthorized or fraudulent activity.

TD Ameritrade carries excess Securities Investor Protection Corporation (SIPC) insurance provided by London insurers, which provides each client with $149.5 million worth of protection for securities and $2 million of protection for cash. Vanguard's excess SIPC insurance, also provided by London insurers, provides each client with $49.5 million for securities and a cash limit of $1.9 million per customer.

Through Nov. 2019, neither brokerage had any significant data breaches reported by the Identity Theft Research Center.

Our Verdict

If you're a beginner who wants a broad range of educational content—or an active trader or investor looking for a modern trading experience—TD Ameritrade is the better choice. Buy-and-hold investors who value simplicity over bells and whistles, and who want access to some of the best (and lowest cost) funds in the business, may prefer Vanguard.

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Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on its platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting thousands of data points that we weighed into our star-scoring system.

In addition, every broker we surveyed was required to fill out an extensive survey about all aspects of its platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of its platforms at our offices.

Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.