6 Things to Consider When Choosing a Brokerage Firm

Choosing a Brokerage Firm

Choosing a brokerage firm can be daunting in today’s investment market. There are many options to consider when deciding which one is best for your investing needs. I often advise my financial coaching clients on several options that may be a good fit for them. However, this is because I have built a strong relationship with them. I understand their personalities, their needs and desires, and their goals and objectives.

I rarely ever give specific financial advice to the general public because there are many things to consider when it comes to your personal finances. Selecting a brokerage firm is both a science and an art. There are specific factors that usually impact everyone when it comes to choosing the best brokerage firm. However, this process is also very unique to each individual.

This is why I have put together a list of common factors that one should consider when deciding on a brokerage firm. So if you are in the midst of trying to decide which firm is best for your financial needs, here are some things to think about.


Historically, brokerage firms have operated out of brick-and-mortar buildings. They offered investors full-service options inclusive of financial advisors and trade execution. Investors had somewhere to go when they had questions or concerns about current or future holdings.

Today, most of the long-standing traditional brokerage firms have both physical locations and robust online trading platforms. And they still offer a suite of services to their customers. They are great options for investors who want 5-star treatment but also desire the convenience of online trading.

A number of virtual brokerage firms have sprouted up over the past few decades or so. Online brokerage firms have changed the investing landscape in many ways. A number of them have 24/7 operating hours, and they offer simple, self-directed trading options.

This has significantly expanded accessibility options for investors. So new investors who don’t need to access a live broker can easily open an account with an online brokerage firm. They can still speak with account managers and tech support over the phone, yet conveniently self-manage their portfolio online.

History and Reputation

Investing is a very sensitive matter as it deals with exchanging monetary funds in a virtual environment. The average person is typically concerned about where they park their hard-earned dollars, especially in today’s economy. This is why it is important to know the history and reputation of the brokerage firm that you select.

A number of brokerage firms have a strong, long-standing reputation in the financial market. This is vital to maintain sustainability in this sector. On the other hand, some firms are newer and haven’t built a solid history as reputable establishments. This doesn’t mean that they don’t operate with integrity, however, this can be a concern for some investors.

Trade Commission Fees

While more brokerage firms are starting to offer commission-free services, a few of them still charge these types of fees. This means that investors are required to pay fees when they trade. This amount can be anywhere from $1-$50 or more, which gives investors a reason to shop around. So, understand how much it will cost you to trade when selecting a brokerage firm. No or low trade fees are ideal for capitalizing on your investments.

Account and Trade Minimums

Brokerage firms vary in terms of account opening minimum deposits and trade minimums. Some firms don’t have minimum deposit amounts while others can require a minimum deposit of up to $30,000. Some firms have trade minimums on certain types of exchanges such as mutual funds or exchange-traded funds (ETF’s) while others don’t. It is important to keep this in mind when you determine which firm is the best one for your needs.

Education & Research Tools

Education and research tools may also be a consideration when selecting a brokerage firm. Some firms have very robust education platforms that allow them to deliver live webinars, consistent print materials, and extensive prospectus reports. These tools can be very useful for new investors who are learning about the ins and outs of the stock market.

Traditional firms with brick-and-mortar locations tend to have a comprehensive suite of educational services available to their clients. Conversely, online brokerage firms tend to be less equipped to provide such services. If educational tools are important to you, you should research which options are available through various brokerage firms.

Promotional Offers

One of the last things to consider is the availability of promotional offers. Such offers generally come in the form of cash or transfer bonuses, free securities, or free services for a limited period of time. Cash bonuses can range anywhere from $50 to more than $3000. Investors are generally required to deposit anywhere from $5000 to $1,000,000 to qualify for such offers. So they are definitely for serious investors who are able to make significant contributions to a new brokerage account.

Promotional offers are generally not important to new investors with less than $5000 in investment capital. However, it may be useful to research options that may be available to you if you are in the market to invest larger sums of money.

I don’t recommend choosing a brokerage firm solely based on promotional offers. You should definitely consider more important factors such as those mentioned above before thinking about promotional offers. Keep in mind that you will most likely have a long-standing relationship with the firm that you select. So you should consider how it meets your most important needs first. Promotional offers are just icing on the cake.