I’m in the process of making a tool that helps investors determine where to open a brokerage account that is likely to fit their own personal needs. Naturally, a part of that process is finding out what’s important to that particular investor.
So I’m curious: What factors would you consider when choosing a brokerage firm?
Here’s my own list:
- Low commission per trade (no commission is even better),
- Access to enough low-cost investment options (index funds or ETFs) to build a diversified portfolio, and
- Prompt reply to online customer-service-related inquiries.
What considerations are on your list?
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{ 13 comments }
What do I look for in a brokerage firm?
The Exit Sign.
Sorry, Mike . . . couldn’t resist.
Ha!
To be clear though, I didn’t mean “full service” brokerage firm. Surely you must use some brokerage firm.
I actually go down to the NYSE and do the trades myself.
Sorry I couldn’t resist that either.
You’re right, . . . I do.
I use Fidelity for my clients and for myself. I like that they’re a private company, they have a good brand with a generally positive reputation and their prices and product selection are very competitive.
With their recent announcement that they’re lowering commissions and offering free trades on certain iShares ETFs, their pricing just got more competitive.
Will be interested to see what others have to say in the comments.
Ability to buy Treasuries at auction or on secondary market at competitive prices.
I like to be able to call and get actually help with out being charged.
I’ve been with some firms that charged me when I had a problem that needed to be fixed.
Fidelity is my choice now. If I’m having problem executing a trade they are always very helpful. They also resolve problems quickly and there retirement depart has very knowledgable people have the aswers when I have one of those IRA questions that nobody else has the answer too.
I look for a money management capability that pays a decent rate of interest on money not invested; meaning usually, a linked money market account whose interest is greater than average.
Couple things…
1) Low cost per execution (preferably w/ no inactivity fees).
2) Finds best available ask price across multiple exchanges.
3) Large inventory of stocks available from the collective to short.
4) Can buy options, forex, bonds, etc. all in house.
I second what Matt SF said, but none of those 4 things matter too much if you’re treated like a pariah when you need some help. Recent case in point: Schwab has StreetSmart Pro, but 90% of what impressed me was the Schwab Rep who made phone appts with me for online tutorial sessions. He answered all the questions I could think of. It was a lot of learning over 6+ sessions, he would even conference another rep in if I had a more advanced question (such as options). By and far, Schwab’s customer service. and the great attitude of their phone reps, especially in *times of great need* is the biggest reason I stay with Schwab. Great customer service shouldn’t be taken for granted. It’s like the brakes on your car, when you need them, you need them fast and nothing else will do. If the brakes don’t work, you’re toast.
This is a bit specialized, but: Fee (if any) to convert from a traditional to a Roth IRA. The opportunity to open a traditional IRA and convert is the only way to get a Roth for those with too much income to open one directly. Tradeking, which is great otherwise, charges a whopping $50 to convert according to an online chat representative I talked to– if you contribute to the max, that’s a 1% fee before you even start trading! Firstrade and Fidelity have no fee. Not sure about anybody else.
What’s important to me… (I use Vanguard for investing and Sharebuilders for Gambling)
1. Expenses
2. Paperless statements (mail fraud, simplicity, and environmental)
3. No phone tree when I call. A person answers.
4. Easy to use site
5. Integration with bank accounts
I agree with the above comments, particularly @RJ Weiss. I use Vanguard for everything, including brokerage services, but got my first 12 trades free and didn’t need to make any others. I guess I would find a cheaper brokerage if I needed more brokerage services.
1. Low transaction costs.
2. Good security (I prefer two factor authentication).
3. Easy to use web site.
4. quick execution and best pricing. While I don’t day trade, I dislike orders that take a few min to complete.
I have E*Trade and Fidelity. I prefer E*Trade’s web site to Fidelity, but prefer Fidelity because they will more than likely be around in a few years
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