Call For Advice: Reader Wants Discount Brokerage Recommendations

Onoodles writes, “I’ve managed to put away 20k into a Roth IRA. I started it directly through one mutual fund and now I’m looking to move it to a discount brokerage firm to diversify. So my question is, which one is the best?!” For a general overview and comparison of leading brokerages, we suggest looking into SmartMoney’s 2007 Broker Survey from a few months ago. And note that by going with a discount brokerage firm, you’ll likely be trading better customer service, research tools, and trading tools for cheaper fees.

Do any readers have specific recommendations they’d like to make?

2007 Broker Survey [SmartMoney] (thanks to Onoodles!)
(Photo: Getty)

Comments

Edit Your Comment

  1. savvy999 says:

    Don’t know about any others, but stay away from eTrade. My problem with them wasn’t their service or timeliness of trades while you’re an active customer, it’s the total clusterf* they are when you attempt to get your funds out someday. Money in? Takes literally seconds, and it’s free! Money out? Takes weeks, unless you want it in a day or two, then they will charge you fees. Opening an account takes 3 mouse clicks… closing an account takes multiple phone calls over several days.

    Perhaps if you link your trading account to an eTrade bank account, it’s a little easier, but I wasn’t about to get hooked into them any deeper. Just stay away.

    Be sure to ask this question of any prospective brokerage– when the time comes, how do I get my funds out and close my account someday?

  2. compuwarescc says:

    I’ve had good experience with CharlesSchwab.com

    They aren’t the cheapest broker ($13/trade online) but they have great customer support, free investing advice (from a real person), and a great checking account that comes with the brokerage account.

  3. xamarshahx says:

    firstrade or scottrade for cheap rates with good service. schwab is great i ahve heard, but i think its 25,000 min., correct me if i am wrong.

  4. JeffMc says:

    I don’t know if they qualify as a discount brokerage but I’d suggest against going with Ameritrade. They had that security breach a while back which I could *maybe* forgive them for but the way they handled it disgusted me. They told their customers only after it became clear that they were going to be forced to as part of the suit against them, and the letter I got from them basically said “There’s no evidence that we lost you identity information so there’s no problem”.

  5. chrisdag says:

    Many years ago I opened a Charles Schwab brokerage account to hold some stock options an employer had granted. Didn’t know anything about stock or brokerages at the time. The Schwab people were great and the online account tools were good enough that when it came time move on from that job I rolled my 401K over to a Schwab IRA account.

    I also have experience with Schwab as a business owner – I ran our small company’s SIMPLE IRA plan through Schwab and was very happy with them except for the inconvenience of having to Fedex in bank checks and paper forms for IRA contributions (electronic transfers would have been better).

    This year after we decided our company should switch from basic SIMPLE IRAs for employees over to a better 401(k) and profit-sharing plan I ended up moving the company business over to The Hartford (www.thehartford.com).

    I still use Schwab for my personal brokerage account and rollover IRA/401(k) accounts but my company runs it’s 401K through The Hartford now. Never used Hartford for an individual account but my experience with them both as the plan sponsor and a plan member has also been very positive.

    My $.02 of course

  6. nweaver says:

    I’ve been very happy with Schwab as an individual account holder.

  7. maizeandblue says:

    Personally it depends on your needs. I reccomend “premimum discount brokers” such as Schwab and Fidelity. I used both ameritrade and etrade but both were a little too electronic for me. They both charged to recieve paper statments and had outsourced customer service in India and the Phillipines that was difficult to utilize and had long hold times. I love the ability to call a Schwab or Fidelity local office and talk to a real broker. Also when you call Schwab CS they state thier call center locaation usually Phoneix and make good on thier promises to return calls and resolve issues.
    Personally my experience with Schwab has been great. I was assigned a new client concierge with a real extension to be my point of contact through my transition to a new broker, I was given a free consultation at a local Schwab branch on my investments, Schwab offers free dividend reinvestment,most funds no load no fee like Janus and Baron (Vanguard and Fidelity funds however have a steep $50 fee). What I also love about Schwab is combination high yield banking and free atm refunds. What it boils down to is if you have a local branch in your area, Scottrade Fidelity and Schwab are all good for this. I have no experience with Scottrade but I do understand its cheaper however I am quite happy with paying a bit more at Fidelity and Schwab to combine my finances and recieve excellent customer service. I reccomend you visit all 3 of those brokers branch offices and find one that meets your invstment and service philosophy and standards.

  8. lalala1949 says:

    In terms of fees and customer service Scottrade cannot be beat. They have local branches all throughout the country and their $7 commission on stock trades is as cheap as they come.

    Definitely stay away from Etrade. When I tried to get my money out (like the above poster) they were a pain in the butt and charged me a huge fee for closing my account. This shows what sort of attitude they have about their customers. Scottrade on the other hand charges no fees to close your account.

    Schwab is good on customer service as well although Scottrade’s fee schedule beats them.

  9. Index4life says:

    I registered to the site solely to reply to this inquiry. I will preface my advice by saying that I previously worked in the retail brokerage and annuities industries and in my years of experience I have found, time and again, that when the source of advice is non-biased the results are always the same and it is simple beyond comprehension. Ready? Here it is:

    Invest in Vanguard Target Date Retirement funds.

    That’s it. Seriously. I have never worked for Vanguard and have nothing to gain but in a nutshell here’s why you should do this – 1.) It is impossible to predict what sectors or geographies will yield an above market return at any given time and to what extent. 2.) Fees destroy real returns and should be avoided like the plague. 3.) Active investing causes taxable events and holding cash can cause you to miss big market upswings when panic sets it. 4.) Risk is adjusted automatically as you near retirement age.

    Why Vanguard? There fees are ridiculously low and their products are incredibly efficient. It’s boring but if your goal is to maximize your returns then this is what you should do. If you want excitement then take your petty cash and go to Vegas.

    There are plenty of sources out there to back this up but there is so much profit to be made by offering exotic investments or stock picking schemes that this message often gets lost in the commotion.

    Some links for the lazy:

    [www.boston.com]
    [www.afcpe.org]

  10. waxigloo says:

    I use Zecco:
    [www.zecco.com]

    10 free trades per month with a $2500 equity minimum (which should be plenty unless you are a day trader).

    $4.50 per trade after that.
    $4.50 for option trading.
    My non-invested money sits in their >4% money market.

    There is a 2 part review here:
    [www.mymoneyblog.com]

    Note that the sign-up issues he speaks of have been resolved and when I signed up it was all online and easy.

  11. Shadowman615 says:

    There’s some good advice and a side-by-side comparison at the Motley Fool:

    [www.fool.com]

  12. Skiffer says:

    I’ve just used Scottrade because…well…my first name is Scott…

    $7/trade, $500 to open an account.

    Haven’t tried to get money out (have to call a branch and have them mail you a check), but money-in can be done easily with an echeck.

    Haven’t run into any glitches or needed to call customer service.

    They have fast trade execution (if you’re daytrading), but their real-time java trading platform is rather ugly.

    I do really like the research part of their website, though.

  13. iEddie says:

    I’ve received spam from Scottrade (as in, sent from Scottrade themselves) so I would never do business with them.

    Schwab is great. Account interface is great. Customer service is great, too (24 hours), and it is in AMERICA. One CSR actually gave me her personal extension. Someone else also promised a callback and actually called me back!

  14. darkened says:

    Scottrade is the best online brokerage there is. However if you plan to use them you better be very self sufficient in being able to research your own purchases and portfolio but at $7 per trade no share limit for even stop limit orders. Unbeatable.

    I had no problems taking money out of my Scottrade and I had a local branch so it was very easy to setup my account with a personally brought in cashiers check.

    Only down side is wire transfers are expensive ($20+ fee?) but that’s probably to be expected any where.

  15. douglips says:

    Schwab has a great feature for mutual fund investors – there is a huge list of funds that you can trade with zero commissions. It’s $13 to trade stocks, or ETFs (Exchange Traded Funds) or funds not on the list, but for those on the “OneSource” list it’s $0.

    Note that they have a weird 1000 share limit on that $13, so if you ever trade 100,000 shares of a penny stock you’ll be sorry. Also, that $0 commission to buy or sell doesn’t apply if you try to sell the shares within some period (I think 90 days.)

    For me, buying/holding/rebalancing mutual funds is all I care about, and Schwab is great. I only pay for my ETFs, and the rest is free.

  16. blis says:

    I’ve been using sogoinvest.com for about a year. No minimum transactions per month, no monthly fees, no transfer funds fees and low minimum (2500). Their per-trade commission is only $3.00.

    [www.sogoinvest.com]

  17. Myron says:

    @Index4life: Amen to that brother.

    If you are looking for a discount brokerage firm I’m guessing you want to ‘diversify’ by buying individual stocks. However, if you go with low cost Vanguard index funds you can easily and inexpensively own the whole market. That’s the ultimate diversification. A target date fund makes it even easier.

    And Vanguard looks out for the little guy. I’ve found their customer service to be great.

  18. SabrinaFaire says:

    I have a Scottrade account. I don’t use it for much but they’ve been very helpful. I’ve dealt with the local branch and the folks there have been very nice and accommodating. I don’t have a lot of stock but they didn’t seem to mind that I was a “small” account. I’d recommend them to anyone.

  19. deseee says:

    optionsxpress.com is the one that I chose after reading several articles at kiplingers, forbes, etc.. I have only made a few trades with them but the people on the phone are knowledgeable and there are tons of tools and articles to help you out.

  20. figz says:

    I’ve been very happy with Fidelity since I made my very first Roth IRA contribution in 2001. Their website is easy to use and their customer service is truly fantastic.
    -figz
    p.s. I’ve had negative experiences with Schwab.

  21. bunnymen says:

    I think I had that piggy bank as a child.

  22. kryx says:

    I’ve used Scottrade for probably 4 years now. I’d say I’m pretty comfortable with them; the commissions are cheap, execution is fairly fast, and initial deposit is very low. If you’re a self guided investor, they have all the bare-bones that you’d need to do anything you’d like. Options with them are a bit more expensive, and I wouldn’t recommend them for options.

    Also, seeing as how they are a discount brokerage, reaching a person can take a while sometimes (I suppose 5-10 minutes by phone, depending on time of day and how busy), but I’ve only had to call them twice in 4 years, and that was to request funds out. I just called them last Friday for a check, it reached my home on Tuesday. Depositing is just as easy and fast.

    Like I said though, if you need any help, advice, or anything, you may be on your own a bit. Otherwise, Scottrade is great in terms of cost and efficiency.

  23. shakegently says:

    I have 5 different accounts with Scottrade and have used them for several years and have been happy with their service.

    I use the free tools from Yahoo, Quicken, MSN, MarketWatch, Motley Fool etc when evaluating and monitoring stocks, but I haven’t really used the resources of my brokerage outside of making sure all of the paperwork was completed correctly.

    While I highly recommend adding some stocks to your investment portfolio, I also recommended looking into some investment newsletters. Unfortunately, no one really gives away great information for free, but I have been very satisfied with newsletters, and although they are expensive, it doesn’t take very long for a few good stock picks to pay for the return.

    I only complete a trade or so per month, so the fees aren’t really that big of a consideration, but I also like that Scottrade has an office a few miles from my house and I can stop by and ask questions (or call) as needed.

  24. Ben Popken says:

    Scottrade, without a doubt.