Brokers & Investment Banks covers retail and institutional brokerages, investment banks, advisory firms and market makers. MoatScope covers 27 companies here. Three have a wide moat, 11 a narrow moat and 13 none.
How the industry makes money
Brokers earn interest on client cash, trading commissions and advisory fees. Investment banks earn from advising on deals, underwriting securities and trading, which makes their results swing with market activity.
Where the moats are
Switching costs, cost advantages and brands are the main sources, alongside network effects at the largest platforms.
- Charles Schwab: the largest publicly traded U.S. brokerage, with scale that funds low prices and client assets that rarely move.
- Morgan Stanley: a wealth-management business built on adviser relationships, alongside investment banking and trading.
- Interactive Brokers: a highly automated global brokerage whose low costs attract active traders and institutions.
The narrow-moat group includes Goldman Sachs, Robinhood, Futu, Raymond James, LPL Financial and Nomura. Companies without a moat include Jefferies, Stifel and eToro. Interactive Brokers scores 89 on MoatScope's quality scale and Schwab 76.
What wears moats down
Falling interest rates cut what brokers earn on client cash, trading and deal activity are cyclical, and price competition keeps pushing commissions toward zero.
What to watch
- Client asset growth.
- Interest rates and client cash balances.
- Deal and trading activity.
Moat ratings and quality scores on this page update as companies report. Price versus fair value for every company in the industry is in the screener.