Brokers for Expert Investors

• Email
• Share
• Print

Have you outgrown your brokerage account?

When you're just getting started with investing, comparing brokerage firms is pretty easy. Nearly every broker lets you trade stocks and mutual funds, so you can focus on things like minimum balances, commissions, account fees, and research resources.

Yet when you go beyond the basics, you might not find the same level of support you get with stocks and funds. If trading options is part of your financial strategy, you won't necessarily get the same low commissions that apply to stock trades. Looking for individual bonds and other fixed-income securities? Not every stock broker offers them. And for round-the-clock traders who want access to futures trading and foreign stock markets, you have to be more selective about which broker you pick.

One-stop shopping
Still, things are better than they used to be. When discount brokerage firms first emerged, they typically offered only bare-bones investing choices. That meant that even if you went with a discount broker for stock trades, you typically needed a full-service broker for other types of transactions.

Now, brokers have expanded their offerings. Many firms, including Schwab (Nasdaq: SCHW) and TD Ameritrade (Nasdaq: AMTD), let you trade options, bonds, and CDs. Fidelity has an excellent system for finding a wide variety of fixed-income securities including Treasury bonds, corporate debt, broker CDs, tax-free municipals, and even zero-coupon bonds.

Around the world in 80 clicks
Brokers are also catering to traders who want 24-hour access to world markets. E*Trade (Nasdaq: ETFC) offers global investing in six different markets from Tokyo to London. Similarly, Interactive Brokers (Nasdaq: IBKR) not only gives you access to global markets but also lets you make currency exchange transactions to fund your foreign investments.

Be aware that some brokers charge additional fees for global trading. Yet for relatively unknown securities that don't trade on U.S. exchanges, these services let you invest where others can't.

A future in futures?
Futures trading gives investors significant leverage, allowing them to control large blocks of assets while putting up just a fraction of their value. Until recently, investors had to open accounts with specialized brokerages in order to trade futures. Now, however, brokers like E*Trade, Interactive Brokers, and optionsXpress (Nasdaq: OXPS) include futures among their investment offerings.

Not for the meek
As brokers incorporate more services and products, it's easier to see differences among their websites and trading tools. Interactive Brokers, for instance, has extremely low commissions -- but some investors are intimidated by its trading interface. Others have more user-friendly applications but charge more.

That means you have to do more research to find the best fit for your trading style once you've become an expert investor. If you trade a lot, however, that research is well worth the effort, as it can save you hundreds or even thousands of dollars each year in lower commission costs. On the other hand, if you're a buy-and-hold investor who's mostly comfortable with stocks and mutual funds, then having those other products is just an interesting feature that you'll probably never use.

For more on broker-related issues, check out:

• Which brokerage firm's stock is the best buy right now;
• Danger signs that your broker's getting rich off your account; and
• How to pick a broker in 60 seconds.