In order to achieve your financial dreams, you need to make the best investments you can. But there's more to smart money management than just picking great stocks. Increasingly, it's becoming just as important to find the right discount broker to give you the best and least expensive access to the investments you want.
How things have changed
When full-service brokers dominated the landscape, many investors chose a brokerage company based more on their personal relationships with their individual brokers than on what the particular company offered in terms of products and services. For most purposes, full-service brokers gave you equal access to any product you'd be likely to want, so you could simply pick the person you were most comfortable working with.
With the rise of discount brokers, all of that has changed. Now brokers have to fight for your business with the promise of lower costs, sophisticated products, and helpful tools to give you an investing edge. To make the most of the new environment, you need to make sure your broker matches your needs and preferences.
When brokers merge
Perhaps the most interesting phenomenon among discount brokers has come from consolidation in recent years. Given some of the difficulties that brokerage companies have faced, including low interest rates that cut income on sweep accounts and forced fee cuts on money market mutual funds, seeing various industry players merge isn't surprising.
But the novel concept that merging brokers are using is to retain their separate identities. Unlike big banks that swallow up smaller competitors whole and then quickly rename their bricks-and-mortar branches to eliminate any reference to the acquired bank's name, many acquiring brokers are counting on the differing reputations between the buyer and the target to draw a diverse set of customers.
For instance, Schwab's
Price still matters
Picking a broker that matches your particular needs is important. But you also want to be able to make trades at a reasonable price.
That's a big part of the price wars that brokers have gone through for more than a year now. Many players in the industry -- including Fidelity, Vanguard, TD AMERITRADE, and Interactive Brokers
With large price reductions on standard commissions, many discount brokers now find themselves in the same general range as far as trading costs are concerned. Even companies like Bank of America
Finding the right balance
In the end, you're the only one who can figure out what the right balance is between broker style, price, and features. The answer will be different for every investor.
Regardless of what's important to you, making a smart decision on which broker you choose is essential. Having the right broker on your side can make a huge difference not just in your investment results but in how comfortable you are with your investing experience overall.
To find the best broker for your money, be sure to check out the Fool's Discount Broker Center.
Fool contributor Dan Caplinger is happy with his broker. He doesn't own shares of the companies mentioned in this article. Interactive Brokers, optionsXpress, and Schwab are Motley Fool Stock Advisor recommendations. The Fool owns shares of Interactive Brokers, TradeStation, and Bank of America; and through a separate account in its Rising Star Portfolios also has a short position in Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy gives you all the help you need.