How to Choose Stock Brokerage
That is Right for You

Choose Stock Brokerage
Which Brokerage Firm Is Right For You

Summarized Overview

You will find information about criteria to choose the right stock brokerage, types of brokerage firm available in the market, what you can expect from a stock broker and tips in choosing them.

You can also vote which brokerage firm you prefer in the middle of the article.

Criteria to Choose Stock Brokerage

As with all important decisions, to choose a brokerage firm that is right for you requires some "homework". And the first step in completing that homework should be asking yourself questions about your finances, knowledge, needs, and investment plan. Putting the answers to the following questions in writing will give you a clearer picture of your needs.

• How much money you have to invest.
  The answer to this question, alone, may trim down the list of potential firms later.


• Level of knowledge in stock investing.
  If you know very little about investing you should immediately place yourself on your own remedial program and try to learn as much as possible before taking any further steps.


• Number of trades.
  Do you plan to make frequent trades, or making only a few trades a year? You should have strategy in mind. Do you prefer value stocks, growth stocks or a combination? What goals are you hoping to accomplish by investing?


• Kind of services that you want.
  Are you looking for a full range or mid-level range financial services, or nothing more than someone who will place orders for you.


• Also, how comfortable are you using a computer, and do you have access to a reliable internet network?

Types of Brokerage Firm

Full-Service Brokerage Firms

They offer the most services, but commissions and fees are the highest. They are known for their extensive research, exclusive advice, as well as a full range of other financial services. This type of firm may require a higher minimum investment to open an account. A dedicated stock broker handles the client's account and get paid mostly through commissions.

To choose stock brokerage with full-services firm doesn't make sense if high commission rates and other fees eat up your potential return. If you have a good-sized amount of money, you'll will find the fees well worth it as they offer solid research and investment advice. The firms may also make you aware of opportunities you otherwise would not have heard about. Sometimes, individuals with substantial money wants to reward himself with services such as financial planning.

Discount Firms

Once offered nothing but a way to trade with lower commissions, but today they do offer some services such as limited advice and research. However, they may charge a minimum fee on all trades. Discount firm works well for investors who are confident in their own knowledge.

Discount firms enjoy the popularity they do because they have become a middle-of-the-road type of firm, which offers the benefits of lower commission rates while still offering few basic services. The difference between the per-trade commission of a full-service firm and that of a discount brokerage firm can add up to substantial savings. If you want a firm that offers more than the bare-bones deep discount or online brokerage firms offer, you would better opt for the discount brokerage firm.

Deep Discount Firms

They offer little other than a way to trade and some customer service. They offer low or no minimum fees too. Deep discount or online services will serve the purpose for investors who are confident, who want nothing more than a way to trade, who like the idea of no or low minimum investments, who want the lowest fees, and who like the idea of having in complete control.

Online investing

It is yet another popular option nowadays. It can be either web-based or software-based. Both require the investors to be comfortable with using the computer and to have access to a reliable internet connections.

Web-based online investing can be right for both casual and active investors, but software-based online investing may be better suited to investors who plan trade actively. In addition, the expensive software keep novice investors away from having to choose stock brokerage of this type.

Note: While trading through discount firms may be done online as well, online investing firms are specifically aimed at only online trading and are in an "online only" category of their own.

Tips to Choose Stock Brokerage Firm

If you're to choose stock brokerage with full-services firm, talk with the account executive who will handle your account and make sure he is someone with whom you're comfortable with and have faith in. Larger firms may be willing to transfer your account to a different account executive if you like the firm but not your stock broker.

For full-service and discount firms, research as many different firms as possible to see what each one offers. Make a list of every type of service available, rate each type in order of importance to you, and eliminate any firm that doesn't score well on those services that you consider important.

For both discount and online firms, they have websites and customer service lines as trial run. Rate each firm on how well their site is designed, how easy it is to use, and any other differences you discover. Note any signs that customer service lines are not run well.

As you're doing all this homework, remember to keep your calculator handy, and be prepared to do a lot of multiplication. Keep in mind that even the smallest differences in commissions and/or fees can turn into some large dollar figures when multiplied by the number of transactions do.

To choose stock brokerage, pay particular attention to its fees structure.

Sign Up to Easy Stock Tips Newsletter
Download FREE eBook Worth $39.95 Now!

Related Reading

What You Can Get From A Stock Broker
Stock broker supposed to provide information that you can use to manage your investments, and to meet your investment objectives.

Related Books

Buying Stocks Without A Broker
It's been called The investment guide Wall Street didn't want published, and it ignited the commission-free investment revolution! With Buying Stocks Without a Broker, Charles thoroughly updates his unique guide to dividend reinvestment plans.

Does Your Broker Owe You Money
This book about the various forms of broker fraud, and helps them determine if they have a claim. Gives you the tools to assess if you have a claim and advised you what your next steps should be.

Search Here For More Information

Top page of How to Choose Stock Brokerage

Back to Homepage