Online brokerage accounts have made stock trading and investing accessible to more people.
When you’re ready to invest like a pro, make sure you consider the following factors so you choose the brokerage company that’s right for you.
Trades may be inexpensive, but online brokerages have come under fire for having a slew of hidden, unadvertised fees.
The American Customer Satisfaction Index reports that online brokerages’ fees are most likely to irritate consumers.
Customer service and easy-to-use online interfaces can make up for the fees.
Charles Schwab topped the ACSI’s list for customer satisfaction of Internet brokerages. Fidelity Investments followed.
E-Trade performed the worst with customer satisfaction, but its rank in the annual report has improved over time.
See if your brokerage product has insurance protection.
Insurance protection for brokerage products protects investors against insolvency of the financial institution, but it doesn't compensate for investment losses or bad investment decisions.
The Securities Investor Protection Corp., or SIPC, is the agency that reimburses investors with assets in bankrupt and financially troubled brokerage firms to a limit of $500,000 per customer, including a maximum of $250,000 for cash claims. Financial institutions may have insurance over and above the coverage it has as a member of the SIPC, but this also would only protect against insolvency.
Regardless of the brokerage company you choose, remember that you can consult with a fee-only financial adviser to ensure that you’re comfortable with what you’ve invested in and the risks you face with your investments.