How to find a stock broker that is right for you

When you are looking to try and find a stock broker that is right for you, I feel that you need to ask yourself two questions:

Do you need any assistance with picking stocks, tax or retirement planning?

Or do you just want to pick your own stocks and sort tax and retirement planning out yourself?

For those who feel they would like help with stock picking and tax, a full service broker may be better suited to you.

Full Service Broker

I will be totally honest with you, I think full service brokers are a complete rip off. The fees are often ridiculously high and are likely to eat well into any returns you might make on your money.

A full service broker will:

  • Help determine your level of risk tolerance and make an investment plan that suits your personal needs.
  • Give you advice on tax and ways to legally avoid it.
  • Give you a valuation on your investment.
  • Help with retirement planning.
  • You get the “expert” experience from the professionals.
  • Access to extensive research on stocks and bonds.
  • If you are completely new to investing and do not have the time to learn, these services may be of considerable use to you.

    However, it is important to be aware a lot of the advisors who work for full service brokers are less than stellar. It is also important to be aware that your money is going to have to perform very well indeed if it is to beat the the risk-free rate of return offered by your bank, after all the broker fees are deducted.

    The full service broker will usually earn substantial fees from you, even if they end up losing a portion of your money.

    I personally feel it is better to put your money in the highest interest savings account you can find, instead of using a full service broker. Alternatively, you could put it in a exchange traded fund that tracks the stock market. The chances are, your net returns will be higher this way, even in the long term.

    I have seen full service brokers charge in excess of $200 for a single stock trade.

    Now onto discount brokers

    OK, I will now get off my full service broker soapbox, I promise.

    A discount stock broker will just let you buy and sell the stocks you choose. They just let you execute trades, nothing else.

    If you check out the discount stock broker page, you will find very reputable brokers offering you the opportunity to buy stocks from as little as $4.50 per trade. Many of these brokers also offer promotions that give you further discounts.

    If you want to learn more about retirement planning and taxes without being charged, mymoney.gov provides a lot of easy to understand information on the topic.

    Conclusion

    In conclusion when you are trying to find a stock broker, you need to decide if you feel it is worth paying a large premium for the services of a full service broker. You know how I feel about them, but we all have different needs.