There are 10 things to consider in choosing a broker or in evaluating whether your broker measures up.
1. Trading commissions: Cheaper may not be better. The price per trade may be indicative of the level of customer service executed. If you go cheaper, you may find yourself at the end of the line with your questions unanswered, whereas paying more would most likely mean excellent service.
2. Other fees: It is important to know that brokerages charge other fees for services, such as for transferring assets into the account, wire transfer, IRA custodian, etc. Know what you need first so you won’t have to pay for unnecessary services.
3. Minimum initial deposit: Beginning investors should consider the initial investment amount they’re most comfortable with. Since some brokers have account minimums, choose one that suits your budget.
4. Customer service: Research on the services offered before signing up. Consider website performance and interface, speedy service, and a good phone service.
5. Traditional banking services: Look for a brokerage account that can adjust to your banking needs.
6. Research: Decide whether or not you have to pay for research (analyst reports, financial data, and real-time quotes) when you can do it yourself online.
7. Mutual funds: Check whether you have to pay for no-load mutual funds since some brokers charge fees. If you have a particular mutual fund family in mind, ensure that your broker offers that.
8. Investment product selection: Check so that the broker you choose offers investment vehicles you wish to use.
9. Other methods of getting your trades executed: Determine whether your broker has contingency measures such as touch-tone phone trading; things like this will prove helpful in the event you have no access to a computer.
10. Freebies: Though not entirely a big deal, free money is free and stress-relieving.
A final word: if you make less than 20 trades annually, never mind the cost; focus instead on customer service.
