Things You Should Look For In Your Discount Broker

Thinking of fixing up a discount broker for your business? Just wait a minute and go through factors that you should consider before you select one. First of all, the lower service charges might tempt you but there are some pros and cons that you should consider while preferring a discount broker over the full-service broker. Just think in these lines and then decide.

What Are The Benefits Of Discount Brokerage?

• Lower Service Cost

The first glaring benefit is the lower service costs in comparison to the full-time brokerage.

• No Product Pushing

They are only concerned about the buy and sell transaction and as they are not advising you on what to buy you can expect them to be immune to biased opinion about stocks. They’ll never try to push any particular product on you. Discount brokers give you easy access to knowledge databases in their premises which help you in getting firsthand knowledge about products that you might be interested in.

What Are The Disadvantages Of Discount Brokerage?

• No Advising

The first disadvantage, if you consider it as one, is that Mr. Discount Broker is going to leave the choice of your stock to you. He’s not going to go about explaining you the good and bad of each stock that you consider. It’s left to you. If you are a fresher in the field you’ve had it. You don’t know what to choose. If you’re experienced it’s a boon. You know exactly what you want and you can do without some unnecessary advice. So, before you dial the number of your discount broker first assess if you want advice or can do without it and then proceed.

• Hidden Costs

Discount brokers are a clever lot. You might be baited in by their low commission slogans, but beware once your transaction is on the roll you’ll understand that they are taking you to pay here and there for the processing to proceed. For example, find out if your broker will be taking fees for issuing you a stock certificate or for mailing you a financial statement. The best thing for you to do would be to sit with your discount broker and discuss the various stages and the costs involved for each of your transaction beforehand in detail so that you don’t surprise yourself with expenditure here and there later on.

• Poor Quality Customer Service

Discount brokers come cheap. So, they are only concerned about getting your transaction completed successfully. Don’t be surprised if they don’t answer your queries patiently or follow up your deal by enquiring later on. Customer service is not a top priority thing for them. If you’re going for a one-time quick transaction, you can compromise with customer quality.

After weighing the pros and cons if you have decided for going for a discount broker, here are some guidelines on which you can base your search.

The Discount Broker Support for Investment Products

As I mentioned earlier, many discount brokers are only concerned about trading stocks, but they don’t have any investment products. They don’t support mutual funds because of which a given transaction proves costlier for you. Go for those discount brokers who offer you mutual funds and other investment benefits. If you are looking out for any particular investment products from your discount broker, just talk it out with them and see if they are offering you those products at a reasonable price. TD Ameritrade, Fidelity and Charles Schwab are some of the industry biggies that are drawing in a lot of customers for their inventory product services.

TD Ameritrade gives a flat commission of $ 9.99 on every internet equity trade regardless of the size of your account or the account balance. This happens to be just one of the large numbers of good reasons for you to join up with TD Ameritrade. Fidelity has a large number of welfare funds to choose from. You can choose from the tax advantage fund, equity fund, flexibond fund and fidelity cash fund amongst a lot of others to choose from. Charles Schwab has a range of investment services worth considering. You can avail a number of no load/ no transaction fee mutual funds, get to research the best stock options with their superior tools, avail the broad range of mutual fund diversification options with trading flexibility. Avail their margin loan facility. Their CD and Money Market schemes are very profitable. You can choose from 20,000 fixed income securities. Industry professionals customize your portfolio. There are quite a number of attractive schemes for retired persons also.

What Are The Commission Rates Of The Discount Broker?

Commission rates are very important for deciding the best broker for your self. You should specifically be on the lookout for no-load/ no transaction fee type of companies. There are a lot cheap discount brokers. E * Trade tops the list with an offer rate of $9.99 commission. It gives 100 percent commission free stocks.

What Are The Different Fees Charged By Your Discount Broker?

Discount brokers charge a number of fees. I always make it a point to check out the fee that they charge before taking their services. Otherwise you might have to face charges that you aren’t prepared for. Some charge maintenance fee, fee for writing inventory etc. Some even charge a fee for inactivity! It’s not advisable that you go for a discount broker who charges less fee because you might not want to actually compromise with the services.
Many discount brokers have uploaded their fee schedules. If you don’t find one online, just tap their customer services wing for a copy.

What Are The Tools Used By Your Discount Broker?

Your discount broker should provide you with the latest tools available in the market for researching. You need to access in-depth information in a short period of time for which you can not do without specialized stock research tools. If you visit any of the premium discount brokering companies mentioned above, you’ll find that they use the latest technology stock researching tools. Apart from them Scottrade investment education podcasts have bagged a place in the top 20 best investment podcasts according to iTunes.

Online Trading Platform Compatibility

As you’ll be making online transactions, be sure to choose a platform that you are most comfortable with. According to a SmartMoney report, Scottrade seems to execute transactions in record time. Next on the list is e-trade. But, TD Ameritrade seemed to have the best online trading platform comprising of 13 tools which would constantly keep you updated about the market condition with pre and post stocks and brokering news.

How Are The Banking Services?

Many discount brokers are offering banking services which include online cash transfers, credit/debit card issue, online bill payment etc., If you are already satisfied with your current bank, you need not avail these facilities, but if you don’t why don’t you try out these banking options ? You need not open a separate account with any other bank. Check out the banking facilities of E-Trade. You’re going to get plenty without having to spend an extra dime. Now, that’s a deal isn’t it?

How Good Is Their Customer Service?

Last, but not the least, is the customer service f your discount broker good? Without good customer service you can’t go much far. These days most companies have a 24 X7 help line. Ameritrade has in addition, expert consultants to help you out whenever you need their assistance. They are fast and efficient in carrying out transactions and they are pretty good at building relationships with their customers too. No wonder they boast of such a huge customer base.