There are so many stockbrokers out there. How do I go about choosing the best one for me?

By Investopedia Staff AAA
A:

If you decide that you have the knowledge and experience to take on stock investing, or if you feel you would like to give it a shot without committing a large amount of money, an online/discount broker is a good choice. But with so many online brokers on the internet today, all offering the same basic services, it can be somewhat difficult to find a broker that stands out from the rest. To find one, just go to an internet search engine such as Google and type in "online brokers" and it should come up with a list of a number of different discount brokers. If you have no idea which to choose, try and narrow down the selection by looking at the fees and commissions they charge on each transaction and look at which ones offer the best promotions (e.g. 30 commission-free trades). Typically, the more well-known discount brokers such as Ameritrade, E*Trade or Charles Schwab, are very popular because they have the reputation to back up the services they offer.

Like many people who don't have a background in finance and lack the knowledge or experience to tackle the financial markets alone, an investment advisor is most likely the individual/service you'll need. However, unlike doing a quick online search for discount brokers, finding an investment advisor can be much more time consuming because almost every financial institution (i.e. financial supermarkets) today offers some type of investment account, not including all of the other independent investment brokers to choose from. One relatively easy way to find one would be to ask friends or family about whom they use and whether they are satisfied with their returns on investments.

If you don't know anyone who can help you find a broker, start by looking at brokerages that are most convenient for you in terms of location, reputation or where you do your banking. If you still find it difficult to choose, just pick a place and go in to speak with them about opening an account. Don't be afraid or a little intimidated because you know nothing about investments - investment brokerages don't expect you to know anything about investing and are more than happy to answer your questions.

After you have found a firm, go there and ask to speak with the branch manager or whoever is in charge. Introduce yourself and tell him or her that you are interested in opening an account and ask for a broker with a proven track record. After meeting the recommended broker, don't be afraid to ask a lot of questions - it's your money. A few questions to keep in mind would be:

  1. What are the broker's investment philosophies, beliefs and methods?
  2. What does he or she consider the top three investment books?
  3. Is the broker astute? Does he or she have initiative and subscribe to other investment websites or financial-information services instead of relying solely on the company's research department?

If a broker has any trouble answering any of these questions, you may want to keep looking.

(For more information, please check out our articles: Ten Things to Consider Before Selecting An Online Broker, Shopping For A Financial Advisor and Choosing a Compatible Broker.)

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