How to Choose the Best Brokerage Firm for You

by Christy Bieber | Published on Oct. 31, 2021

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Your brokerage firm choice could have a big impact on your investments.

If you want to invest money, you need to open a brokerage account. But with so many different brokers out there, how do you pick the right one?

Your decision will affect many aspects of your investing life, from how much your investments cost to what assets you can buy and sell. To ensure you make the right decision and end up happy with your broker over the long term, take these four important steps.

1. Decide what kind of account you want to open

You may want to open a standard taxable brokerage account, a custodial account for your children, a 529 plan to help save for college, or one of several types of retirement accounts such as a traditional IRA, a Roth IRA, or a solo-401(k).

Not all brokerage firms offer all types of accounts, so consider what your plans are to make sure you find a broker that will accommodate your financial needs.

2. Determine your investing priorities

Different brokerage firms have different strengths. Some brokers are better for people who want to trade but don't have much money, while others cater to investors with a higher net worth. Some focus on full-featured desktop trading platforms for experienced traders, and others are designed for mobile users who want quick and simple trades. Some are no-frills and charge low fees or no fees, while others may cost more or have higher account minimums but provide better customer support.

Think about the type of experience you want to have and what's most important to you so you can find a brokerage firm that's a good match.

There's also a big difference in the types of assets different brokerage firms focus on. For example, some have a huge selection of inexpensive ETFs and no-load mutual funds, while others allow cryptocurrency trading -- which most mainstream brokers still don't offer. You'll want to think about what types of assets you're hoping to trade and look for a brokerage firm that will allow access to all of them.

3. Evaluate the broker tools and support you'll need

If you're a beginner investor, then you may have different needs when it comes to customer education and trading support. You may want access to lots of webinars and educational articles that teach the basics of investing, and you may be interested in screeners that make it really easy to pick out different assets to buy.

If you're a more advanced investor, on the other hand, then you're likely more interested in the charting features, expert analysis, and in-depth company research you can access.

Think about where you're starting out -- and how much time you plan to spend devoting yourself to researching investments -- so you can find a brokerage that offers the tools and materials you're looking for.

4. Explore trading platforms at different brokerage firms

Finally, you want to make sure you are comfortable navigating the brokerage firm's trading platform to buy and sell assets.

Most brokers will let you download their apps or try out their desktop software without transferring money into the account. Consider spending some time playing with the platforms each broker you're interested in offers before you make your final choice.

By following these four steps, you should hopefully end up with a brokerage firm that makes investing easy and gives you access to the type of account and assets you're looking for.

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