All Stock Broker Firms Are Not Created Equal

Choosing between the many stock broker firms that are available can seem like a challenging task for an investor. If you want to get involved in the stock market, you are going to need to make sure that you choose the right broker for you. Here are a few things to consider when choosing a stock broker firm.

Fee Structure

One of the most important things that you will need to consider is the fee structure of your broker. Stock brokers have many different ways that they can charge you and you want to make sure that you understand the fee structure before you sign up with them. There are discount brokerages and their are full-service brokerages. A discount broker is designed to allow you to gain access to the stock market without paying a large commission every time that you trade. At the same time, you are not going to get as much personalized attention with this type of broker. They are basically going to be a conduit for you to get into the market. A full-service broker is going to charge you more commission, but they are also going to give you more service. A full-service broker might charge you a flat fee for every transaction or they could charge you a percentage. If they charge you a percentage, the amount that you pay for commission is going to depend on how big the trade was. Some brokerages are going to charge you an hourly fee for advisement.

Performance against Benchmarks

Something else that you will want to look at is the performance of the stock broker firms. When you are going to be working closely with a stock broker, you want to make sure that they know what they are talking about. Someone can tell you that they know how to trade the markets, but until you see some results, you may not be inclined to believe them. This is where benchmarks come in to play. A benchmark is a financial index that gives investors a point of comparison. For example, you may want to work with a broker that has shown the ability to consistently beat the S&P 500. This would tell you that your investments would outperform the rest of the stock market as a whole.


You will also want to determine what the focus of the stock broker firm is. Many companies put an emphasis on helping you choose investments only. Other companies will focus more on teaching you how to choose your own investments. They will conduct classes, provide information, and try to teach you how to be self-sufficient in this area. If you want to be a complete trader, you will eventually want to learn how to do things on your own. You never know when that good stock broker that uses all of your investments for you is going to move to another firm. At that point, you need to have a basic understanding of how to choose investments.

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