NerdWallet investigated major brokerages鈥� official financial statements and found that these major brokerages aren鈥檛 spending most of investors鈥� commission in a way that directly benefits their customers. Instead, the three largest online brokers spent an average 88 percent of their on nonexecution expenses. Only 12 percent goes toward trade execution, while nearly the same amount is spent on advertising. A whole 24 percent goes to legal and other indirect operating expenses.
By contrast, deep discount brokers Interactive Brokers and Speed Trader spent an average of 59 percent on trade execution with only 7 percent going to advertising and general expenses.
