This educational video is part of Tonka Beans' educational video series. In this episode you will learn about the 5 key factors you need to consider before selecting your full-service or discount broker... Distributed by Tubemogul.
Today, how to pick a brokerage firm. There's a sea of money experts out there eager to give you their stellar device. So how do you pick one? Hi I'm Zina Spezakis, and welcome to Tonka beans. Some of my friends have worked with brokers and financial planners, but they've all been disappointed with the experience. I hear a lot of things like, "He doesn't listen to me" or "He doesn't give me the right advice.” I even had a friend whose broker did such a bad job understanding her particular goals and constraints, that he put her investment that lost 40% in 3 months. And I asked her "Why did you pick this guy?" well she said he was cute, and this guy was from a top tear investment bank, hopefully when you pick any financial resource, you'll be a little bit more discerning, and to help you, here's some important things to consider. Number one, their fees. Beyond the normal trading commissions, you'll find their brokerages may charge a whole array of fees including fees for transferring assets into the account, fees for closing an account, and this is an important one if you're using an advisor how is the advisor get paid? i discussed this in greater length in my video "brokers don't always have your best interest in mind" so watch it and learn some of the scary truths on what goes in some of these brokerage houses and how some of them maybe ripping you off. Number two, the minimum initial deposit. If you're just starting out, consider what you will be able to comfortably invest initially. Some brokerages have minimum account sizes. So find the one that best fits your budget. Number three, customer service. That's a biggie in the case of discount brokers customer service includes website performance and its interface. Check out each brokerages website before deciding. Is the interface intuitive? Can you find what you're looking for without having to click 50 times? Is it speedy? If talking to a live human is important, test their phone service. Does the brokerage answer the phone properly? Especially if the web goes down this may be important. Is there an office nearby just in case you need to talk to someone face to face? And if you're using a broker is he easy to reach and does he really understands your goals and constraints. Some brokerage markets their research services as a real plus. That's fine but you probably don 't want to pay for it. This is the 21'st century after all, and there's plenty of research available on the web for free. You can find things like mutual fund research reports, analyst reports, real time quotes and really detailed financial data. And number four, traditional banking services offerings. Do they offer traditional banking services? This might not be tops on your list, but if you want to consolidate your pens and statements, think about looking for a brokerage account that can accommodate you banking needs, many brokers now offers banking services ATM cards, direct deposit, bill payment and even credit cards. Your cash may even attract higher interest rate in brokerage money market account versus a typical savings or checking account. And finally, number five, investment product selection. All brokerages offer stocks traded on a major exchange. And most will offer mutual funds. Other choices such as options, government bonds and corporate bonds are not available through every brokerage. Determine what you'll expect you'll need. But remember though if you're just starting out a simple stock index fund should do. Anything fancier than that will require a lot more effort, follow up and expertise. As far as freebies and perk, i know you're smart enough not to fall for free pens or even free rubrics cubes. I wouldn't suggest making too big of a deal about these freebies, after all, they're a one time thing, and $100.00 or a new coosh ball probably isn't going to be worth the hassle if you soon find out that you made the wrong decision and you have to move your account elsewhere. And for more information, please visit us on tonkabeans.com, and we also want to hear from you, so please join our community and become one of our opinion makers. This is Tonka Beans, I'm Zina Spezakis, and until next time, thanks for watching.