Home » All Posts » How to Choose a Firm

How to Choose a Firm

[Please note the website disclosure statement. I have no financial relationships with any of the firms mentioned and receive no kickbacks for mentioning them. However, in the name of transparency, I did previously work at one of these firms. I have avoided naming firms that I dislike to prevent litigation.]

So, you are in the market for an investment account provider. Who will you choose? With so many choices nowadays, this could seem like a daunting task. During today’s post, my goal will be to break down the primary considerations you should make when choosing a firm. All viewpoints are my own, and I have no financial kickback with any of the firms listed. So, without further ado, here are three primary factors you should consider when deciding which brokerage firm to work with: Fees, services, and accessibility.

Fees

No one likes paying more than they need to for things, and investments should be no different. So, what types of fees should you be mindful of? Well, with investing, there are account and investment level fees. This category is essential because costs eat into your investment returns, directly impacting your ability to retire or achieve financial independence.

The first level of fees is what you pay the brokerage firm to have an account with them. If you are a self-directed investor, you should be looking for a firm that charges no fees to open or maintain an account. Almost every major brokerage offers no-fee accounts nowadays, so why would you pay for this? Exactly, you shouldn’t! 

If you decide you would prefer professional help, working with an advisory firm can make sense but be sure to shop around. Many low-cost professional options exist, such as Betterment and Vanguard Digital Advisor. These advisors use Rob-investing strategies to help you make money at a modest expense. However, if you are looking to work with a dedicated person, you will pay more for that, so decide how important that is.

What about the second level of fees? I’m glad you asked. These are investment level fees, and you pay them when selecting or change investments. Like Charles Schwab and Fidelity, most large brokers offer stock and ETF trading without commissions, which is a considerable saving. If you are a mutual fund investor, make sure the firm you do business with offers a sufficient number of low-cost, well-performing funds without loads or transaction fees. A load is a fee paid when purchasing a fund that essentially acts as a mark-up in price. When it comes to fund investing, Charles Schwab, Fidelity Investments, and Vanguard are all great options.

Services

The second category is services provided, which boils down to the bells and whistles you need from a firm. All firms offer various services, but you should only care about which features genuinely benefit you. Choose whichever firm best fits your needs, whether it is access to financial planning or complex research tools. Remember, your needs are different from Jill’s! 

Accessibility

The last category is accessibility, which simply means how easy it is to do business with a brokerage. While accessibility is a service, I feel it is a standout category on its own since it is such a critical component to how you interact with a business. Now, some firms only provide email-based customer support, and others have offices you can visit. Choose the firm that can meet your learning style for resolving questions or issues, and make the best choice for yourself. If you need access to a firm with offices across the country, Charles Schwab and Fidelity Investments can be great options. If you do not need someone to meet with, a digital-only approach such as Betterment or M1Finance could be sufficient. Additionally, if you reside out of the United States, there are many restrictions on what you can do. If you are someone who resides or regularly lives outside of the US, confirm what the firm does and does not allow.

My thoughts

So, who do I like? In no particular order, other than alphabetical: Betterment, Charles Schwab, Fidelity Investments, and Vanguard. All four provide great value and minimal fees. Schwab and Fidelity have no commissions and allow for fractional stock and ETF trading, meaning you can build custom indexes. Schwab and Fidelity tend to have the upper hand over Vanguard if you need excellent customer service, but the investment account holders own Vanguard (i.e., you!). So, who will you pick and why? Tell me in the comments below, and have a great day!


Mile High Finance Guy

finance demystified, one mountain at a time






Should Gold Be In Your Portfolio?
Why Do You Seek A Financial Guru?
Buying International Stocks Is Essential, But Not Exciting

Leave a Reply

Your email address will not be published. Required fields are marked *