| Is What You See What You Get? | | | | willing to receive orders from you. |
| "Hey look at that commercial. I like that guy, and he | | | | 6 - Research, Investment Products and Tools: You |
| has a serious face on. The actor must know what he | | | | will also receive plenty of information from your new |
| is doing, so that broker he is representing must be | | | | broker on types of investment products and |
| great!" I know that's not you, but it brings up a good | | | | research available. You may also want to probe what |
| point. What do you look for in a good discount | | | | tools they have that their competitor doesn't. |
| broker? Before we get all enamored with commission | | | | Consider whether those tools are essential to you in |
| prices and free toasters, let's think about what could | | | | light of your overall personal financial plan. While some |
| be important to us when looking for a good broker. | | | | bells and whistles look inviting, they can become a |
| It's vital that we know because we can't afford to | | | | distraction to making money. Design a plan on how |
| become discouraged from investing if we can't stand | | | | you intend to invest first, and then determine what |
| our broker or hate our broker's platform. | | | | tools you will need to help you out. |
| Our path to building to wealth should be free of | | | | 7 - Web-based vs. Platform: Access to your broker |
| obstacles. Investing is too important to let small | | | | comes in mostly two forms - web based, which is |
| things like the wrong broker get in the way of | | | | access to your broker through your browser |
| success. Here are 10 things to consider when | | | | (Internet Explorer, AOL, Firefox, Safari, Opera) or a |
| choosing a discount broker. | | | | trading platform, which is direct access software |
| 1 - Access to my money and other banking services: | | | | downloaded to your computer, that you can use to |
| Do I have to wire out money, or can I use a check | | | | access the markets, just like the professionals do. If |
| and/or debit card, like at my bank? Do they have | | | | you travel a lot, you may also consider asking about |
| money market sweeps for my capital when I am not | | | | a third access point: the PDA, like a Palm, iPhone or |
| actively invested, and what rate are they paying? Is | | | | Blackberry for quotes and trades. |
| automatic bill payment possible? Can I also do direct | | | | * No matter which access point you use, probably |
| deposit? | | | | the most important consideration in choosing a |
| 2 - Tax Issues: Since I do my own taxes, I find out | | | | broker is being comfortable with the platform. Since |
| if I can import my year's trades into TurboTax or | | | | most times you won't be able to experience this until |
| Tax Cut. One of my brokers has this option. As such, | | | | the account is open and you have downloaded the |
| it literally takes me less than 30 seconds to export all | | | | software, I highly recommend you find a local office |
| my year's trades to TurboTax. | | | | and try a demo there. Sometimes, discount brokers |
| Keep in mind: While keeping the sales price is required | | | | who are not in your local area have "demos" that |
| by the IRS for all brokerage firms, your brokerage | | | | either you can try online or they can send to you on |
| firm may or may not keep your original cost of your | | | | a CD-ROM, as well. |
| investment, as you will need both the sales basis and | | | | * Learning the trading platform may seem |
| cost basis to figure out whether you owe any tax. | | | | overwhelming, but take your time. Having the |
| Depending on your strategy, it may be wise to | | | | patience to learn the platform will pay off in spades |
| contact the discount broker, tax professional and/or | | | | in the long run. Fortunately for us, most discount |
| the tax software programs for more information and | | | | brokers have special classes or online tutorials in a |
| clarification. | | | | webinar format to show you how to learn their |
| 3 - Commissions: Unless you intend to trade more | | | | platform. |
| than 5 times a month, don't make the price of | | | | 8 - Education: Most firms offer in-house classes, |
| commissions an issue in choosing your broker. A $2 | | | | webinars, special training sessions and guest speakers |
| difference or saving $10 at the end of the month | | | | to help you along your way. Ask your discount |
| may not be worth the trouble if you don't like your | | | | broker how they help their customers learn and |
| broker's customer service or trading platform. You | | | | grow. |
| should focus your efforts on building a solid trading | | | | 9 - Free Stuff: Do not become distracted by limited |
| plan, where the real money will be made or lost. | | | | offers, free trades or cash back. Focus on the long |
| 4 - Fees and minimums: You should be plainly aware | | | | term value of the brokerage firm, the platform and |
| of the fees brokers charge for services like wire | | | | issues that are important to you. |
| transfer, checks, etc. Some even charge money for | | | | 10 - Asset protection: US financial regulatory |
| using their trading platform (and I don't know why). | | | | organizations require all participating member firms to |
| As with commissions, most fees you encounter | | | | carry insurance on your assets. But you should still |
| won't have any relevant impact in choosing a broker, | | | | ask "Is this firm insured by the SIPC, and for how |
| but you should be aware of them as surprise charges | | | | much?" What other measures are being taken to |
| can often irritate customers. | | | | protect your assets? What happens if someone |
| 5 - Customer Service: This can be the make or break | | | | steals your checks or debit card? Learn how you are |
| decision in choosing a broker. All of us at one point | | | | protected and in what ways. |
| will experience a customer service issue, and should | | | | If you need a place to start, here is a list of some |
| thoroughly challenge our broker of choice on | | | | brokers (in no particular order) to look at: |
| customer service. Ask them: are they rated on | | | | Fidelity |
| customer service and by whom and how? Don't just | | | | Schwab |
| believe them when they say "We're good." Test | | | | Scottrade |
| them. Don't hesitate to call when the first issue | | | | Tdameritrade |
| comes up. During a big emergency is a bad time to | | | | Tradestation |
| do that. Also ask them: what are you currently doing | | | | Interactivebrokers |
| to improve customer service. | | | | Thinkorswim |
| Secondly, it's important to know how to contact | | | | As you become a better investor, your investing |
| customer service if there happens to be a power | | | | needs will change. I have actually gone through quite |
| outage or your trading platform crashes. I encourage | | | | a few brokers since I started investing. Building the |
| you to write down all the methods for contacting | | | | right relationship is important. It can encourage you to |
| your brokerage firm, including touch tone trading, | | | | invest right. It can also bring about improvements to |
| instant messaging, email or the ability to physically | | | | your own trading plan. In the end, the right broker |
| drive to a local branch. Be aware that many brokers | | | | should make building your wealth easy! |
| impose restrictions on methods by which they are | | | | |