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The Complete Guide to Choosing an Online Stock Broker
Fees, platform features and security are some key considerations
Profitable investing requires you use a brokerage service that aligns with your investing goals, educational needs and learning style. Especially for new investors, selecting the best online stock broker that fits your needs can mean the difference between an exciting new income stream and frustrating disappointment.
While there’s no sure-fire way to guarantee investment returns, there is a way to set yourself up for success by selecting the online brokerage that best suits your needs. In this guide, we’ll break down everything you should look for in your ideal brokerage, from the obvious (like whether or not the platform allows you to trade the securities you’re interested in) to the not-so-obvious (like how easy it is to get support from an actual human when you need it).
- Access to the financial markets is easy and inexpensive thanks to a variety of discount brokers that operate through online platforms.
- Different online brokers are optimized for a different type of client—from long-term buy-and-hold novices to active and sophisticated day traders.
- Choosing the right online broker requires some due diligence to get the most for your money. Follow the steps and advice in this article to choose right.
Step 1: Know Your Needs
Before you start clicking on brokerage ads, take a moment to hone in on what’s most important to you in a trading platform. The answer will be slightly different depending on your investment goals and where you are in the investment learning curve.
If you’re just starting out, you may prioritize features like basic educational resources, comprehensive glossaries, easy access to support staff, and the ability to place practice trades before you start playing with real money.
If you have some investment experience already under your belt, but you’re looking to get serious, you may want more high-level education and opinion-based resources authored by professional investors and analysts, as well as a good selection of fundamental and technical data.
A truly experienced investor, perhaps someone that’s executed hundreds of trades already but is looking for a new brokerage, is going to prioritize advanced charting capabilities, conditional order options and the ability to trade derivatives, mutual funds, commodities, and fixed-income securities, as well as stocks.
Be honest with yourself about where you are right now in your investing journey and where you want to go. Are you looking to establish a retirement fund and focus on passive investments that will generate tax-free income in an IRA or 401(k)? Do you want to try your hand at day-trading but don’t know where to start? Do you like the idea of tweaking and tailoring your own portfolio, or are you willing to pay a professional to ensure it’s done right?
Depending on which path you want to follow, there may be many more questions you’ll need to answer along the way as you gain experience and refine your goals. For now, however, start with these four crucial considerations to help you determine which of the brokerage features we discuss below will be most important to you. To help get those analytical juices flowing, we’ve included several sample questions under each broader topic:
- Generally speaking, are you an active or passive investor? Do you want to be super hands-on and execute day- or swing-trades? Do you see yourself eventually leaving the 9-to-5 grind and becoming a full-time investor? Or, instead, do you want to find a few solid investments to hold for the long haul with little or no day-to-day interaction?
- How much do you already know? What kind of trades will you want to execute? Are you going to be the type of investor that knows what they want to do and just needs a platform that makes it easy and quick to execute trades, or do you want a broker with a broader range of resources to help you identify opportunities? What kind of securities are you focused on? Stocks, mutual funds, ETFs? If you are more advanced, do you also want to trade options, futures, and fixed-income securities? What about margin trading? Do you need access to conditional orders, extended-hours trading, and automated trading options?
- Do you want help? What kind? Do you want to go the DIY route, learn how to interpret charts and financial data to find and execute your own trades, or would you prefer to hire a pro? If you want to do it yourself, where are you on the learning curve? What sort of resources will you need to further your knowledge? Will you need easy access to support personnel, or are you able to learn what you need to know through online educational resources? Are you happy to execute trades online, or will you want to call in to have a broker assist you with the process?
- What are your goals? What are you investing for? Why are you choosing to invest? Are you trying to supplement your regular income to improve your current standard of living? Is there a specific event or expense you want to fund? Do you intend for this to eventually become your primary income source? Are you trying to build up retirement savings and, if so, do you already have a retirement account or will you want to open a new one with your chosen brokerage?
There are no wrong answers to these questions. Be honest with yourself about how much time, energy and effort you’re willing and able to put into your investments. Your answers may change over time, and that’s ok. Don’t try to anticipate all your needs and goals for the rest of your life. Just start with where you are right now.
Step 2: Narrow the Field
Now that you have a clear idea of what your investment goals are and what basic services you’ll look for in your ideal brokerage, it’s time to whittle down your options a bit. While there are certain brokerage features that will be more important for some investors than for others, there are a few things any reputable online brokerage should have. With such a wide range of available options, checking on these basic necessities is a great way to narrow the field quickly.
Stock Broker Regulation and Trust
Is the brokerage a member of the Securities Investor Protection Corporation (SIPC)? There will typically be some kind of notation or disclaimer at the bottom of the home page. You can quickly look up the brokerage on the SIPC website.
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Is the brokerage a member of the Financial Industry Regulatory Authority (FINRA)? This should also be very clearly noted in an easy-to-find location. You can look up brokerages on FINRA’s BrokerCheck website.
If the brokerage offers checking or savings accounts, or any other deposit products, are they covered by the Federal Deposit Insurance Corporation (FDIC)? Investment products – such as brokerage or retirement accounts that invest in stocks, bonds, options, and annuities – are not FDIC insured, because the value of investments cannot be guaranteed. If the brokerage offers CDs, Money Market Deposit Accounts (MMDAs), checking, or savings accounts, however, they should be fully backed by the FDIC.
What kind of insurance do they provide to protect you in case the company fails? As a member of the SIPC, the company should have insurance with a per-customer limit of at least $500,000, with $250,000 available for cash claims. If the company adheres to the Customer Protection Rule, it should also provide additional coverage above and beyond the basic requirements of the SIPC.
Is there any kind of guarantee of protection against fraud? Will the company reimburse you for losses resulting from fraud? Make sure you double check what the brokerage requires of you in order for you to be reimbursed. Find out if you have to provide any documentation or take specific precautions to protect yourself.
What are current customers saying? Try searching online for consumer reviews of the brokerage, using keywords like “insurance claim,” “fraud protection” and “customer service.” Of course, online reviews should typically be taken with a grain of salt – some people just like to complain. However, if there are several users from different sites all lodging the same complaint then you may want to investigate further.
Online Security and Account Protection
It’s important to know how well a brokerage helps you protect your information.
Does the brokerage website offer two-factor authentication? Do you have the option of activating a security feature in addition to your password? Common options can include answering security questions, receiving unique, time-sensitive codes via text or email, or using a physical security key that slots into your USB port.
What kind of technology does the broker use to keep your account safe? Find out if the broker uses encryption or “cookies,” and if it clearly explains how it uses them to protect your account information and how they work.
Does the company ever sell customer information to third-parties, like advertisers? The answer should definitely be no.
Brokerage Account Offerings
Since the types of tools you need will depend on your goals, you should also do a quick check for the following items to weed out brokerages that simply won’t meet your needs.
What kinds of accounts does the broker offer besides standard (taxable) investment accounts? For example, if you have dependents, find out if you can open an Education Savings Account (ESA) or a custodial account for your child or other dependents.
Can you open a retirement account? Look into whether the broker offers Roth or traditional retirement accounts and if you can roll over an existing 401K or IRA.
Are there different products for different investing goals? For example, find out if the broker offers managed accounts. Also, find out if there investment minimums for different types of accounts.
Can you manage retirement accounts for employees through the brokerage? This may apply if you’re a small business owner. These types of accounts include SIMPLE or SEP IRAs.
Does the brokerage offer Self-Directed IRAs or Solo 401K options? This applies if the only employee in your small business is you.
Step 3: Figure Out the Fees
While there may be other things that matter more to you than fees, you should start out with a pretty clear idea of how much you’ll pay to use any particular brokerage.
For some, a small premium may be justifiable if the platform offers features that its cheaper competitors lack. In general, however, you want to lose as little of your investment returns as possible to accounting fees and trading commissions.
By starting with the bottom line, you can easily determine which stock brokers are too pricey to consider and which simply aren’t compatible with the type of investment activity you’re focused on.
Broker Account Fees
Does the broker charge a fee for opening an account?
Is there a deposit minimum? Bear in mind that mutual funds often have investment minimums of $1,000 or more, but that’s not the same as a brokerage requiring that you deposit a minimum amount of cash just to open an account.
Are there any annual or monthly account maintenance fees? If so, are they waived for larger accounts or is there an easy way to avoid them even if your account balance is small? For example, Vanguard waives its annual fee if account holders agree to receive documents electronically.
Does the broker offer access to a trading platform as part of their free membership? If you’re just starting out, the free platform may suit your needs perfectly.
Is there a Pro or Advanced trading platform that is pay-to-play? If you’re a more advanced investor, it’s important to know whether or not you’ll need to pay to upgrade your account to access tools and resources that are up to your speed. Some advanced platforms are free for customers who agree to place a minimum number of trades per year or invest a minimum amount.
What are the margin rates? Margin trading is only for very experienced investors who understand the risks involved. If you’re a new investor, this point won’t apply to you.
What’s the minimum loan amount and account balance? Most brokerages will offer lower interest rates for larger amounts, but don’t let that be the reason you borrow more than you should.
Do trading commissions depend on how much you have invested through the brokerage or how often you trade? For example, Vanguard’s trading commissions vary depending on account size, while E*TRADE offers a reduced commission to customers who trade more than 30 times per quarter.
Commissions at Charles Schwab are lower than competitors, but you must deposit at least $1,000 to open an account. Make sure you look at the prices that will most likely apply to you based on your anticipated account balance and trading activity.
Phone or Online
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Are there different commission rates for different securities? If you plan on trading more than stocks, make sure you know what the fees are to trade options, bonds, futures, or other securities.
If you’re interested in mutual funds or ETFs, are there fee-free options? What is the minimum investment? Make sure that mutual funds that allow you to buy and sell for free (often called No Transaction Fee, or NTF, funds) don’t charge other types of fees instead. Mutual funds often come with a number of different kinds of expenses, some of which can sneak up on you. Make sure you review the prospectus of any fund you’re considering to ensure you understand all the costs involved.
Does the brokerage offer any free or reduced-price trades? The number of ‘bonus’ trades you receive may depend on your account balance, so make sure you check on what’s offered for the account level that would apply to you. Also be sure to check on what kinds of trades qualify for the discount—if it’s just for stocks and if ETFs, options, or fixed-income securities count.
Is the commission schedule conducive to the kind of trading you’d be doing? Are you rewarded or penalized for more active trading? For example, Vanguard’s commission rates increases after the first 25 trades for Standard and Flagship customers, or after the first 100 trades for Flagship Select customers, as you can see in the chart above. This means that customers that focus on passive, buy-and-hold investing reap the most benefit.
Conversely, E*TRADE offers reduced commissions after the first 30 trades in any given quarter, so active traders are rewarded for using the platform more often.
If the broker offers advisory services, how much do they cost? Is there a minimum account balance required to qualify for those services? If you’re not looking to manage your own portfolio for whatever reason, make sure you pay attention to advisor fees very closely.
Step 4: Test the Broker’s Platform
While any brokerage should have a pretty decent description of what kinds of tools and resources their trading platform offers, sometimes the best way to assess platform quality is to give it a test drive. For brokers that allow you to open an account for free, it may even be worth the effort to go through the signup process just to access the trading platform if that’s what’s necessary.
Whether the brokerage has a web-based platform that anyone can access or a free downloadable platform that requires no-strings signup, do what you can to access the tools you’d actually use for free.
Even if you’re a more advanced trader, and there’s no free way to play around with “Pro” tools, you can get a good idea of the quality of a brokerage’s offerings just by looking at its basic suite. If there’s nothing in the standard platform that seems promising, it’s unlikely the advanced platform will be worth your time either.
On the other hand, some companies offer a huge array of tools and resources with their free products, so don’t write off brokerages with only one platform just yet.
We’ve already spent a good amount of time narrowing down your choices based on price and basic account offerings. Now that we’ve finally gotten to the fun stuff, make sure you spend time looking at the features available in multiple areas.
Go through the motions of placing a trade to see how smoothly the process operates. Pull up multiple quotes for stocks and other securities, and click on every tab to see what kind of data the platform provides. You should also check out any available screeners or other tools provided to help you find investments that meet specific criteria.
Questions to Answer While Testing Platforms
What types of securities can you trade on the platform? You should already have ruled out any platforms that don’t allow you to trade the securities you’re interested in. Make sure this platform automatically allow you to trade preferred shares, IPOs, options, futures, or fixed-income securities. If you don’t see particular security on the platform, but you know that the brokerage supports it, try looking in your account settings, or doing a quick search, to see how you can activate those features and learn about permission requirements.
Are quotes in real-time? Are they streaming? There will be multiple ways you can pull up a price quote for a given security, but not all of them will provide the most up-to-date data. Make sure you are aware of where you can find real-time streaming information to ensure your trades are well-timed. Vanguard’s web-based platform, for example, provides real-time data in its Ticker Profile pages, but it requires manual refreshing. Simple quote-level data is delayed by 20 minutes or more. Schwab’s online quotes also require manual refreshing, but the downloadable StreetSmart Edge platform and its cloud-based counterpart both offer real-time streaming data.
Can you set up customized watchlists and alerts? If you’re going to be a more active trader, you’ll likely want to be able to receive alert notifications via text, in addition to email, and set up multiple watchlists based on different criteria.
Does the platform provide screeners that you can customize to find stocks, ETFs, mutual funds, or other securities that meet your specific criteria? Even if you’re brand new and have no idea what any of the options actually mean, play around with the various parameters to get an idea of how easy the tools are to use. A good platform will be intuitively organized and easy to operate.
What kinds of orders can you place? Go through the motions of placing a trade and take a look at what types of orders are offered. A basic platform should offer at least market, limit, stop, and stop limit. A better platform will also allow you to place trailing stop orders, or market-on-close orders (which execute at the price the security reaches at market closing).
If you’re looking to make relatively few trades, and you’re not interested in day- or swing-trading, a basic selection of order types should be fine. If you’re looking to get into the nitty-gritty of stock trading, however, you should look for a wider selection. If you’re more advanced, you should look for the ability to place conditional orders that allow you to set up multiple trades with specific triggers that will execute automatically when your specified conditions are met.
Do you have control over order timing and execution of trades? A basic platform should at least allow you to place trades that are good-for-day (meaning they can be executed at any time during trading hours) or good-until-canceled (which keeps the order for up to 60 days until it is executed or you cancel it).
A more advanced platform will allow you to place limit orders with some more variability, such as fill-or-kill (which automatically cancels the order if it is not entirely filled immediately) or Immediate or cancel (which automatically cancels the order if it isn’t at least partially filled right away).
Can you trade in Extended Hours? Stock and ETF trades take place outside of normal market hours of 9:30 a.m. – 4 p.m. EST, the in pre-market and after-hours periods. Each brokerage has its own definition of the specific time periods these Extended Hours sessions occupy. For example, Schwab has Pre-Market trading beginning at 8 a.m., while E*TRADE’s Pre-Market session begins at 7 a.m.
Not all platforms allow you to trade during extended hours, and some only allow trading during after hours, but not during pre-market hours. You may be charged a fee for extended hours trading, so make sure you review the terms of those trades to make sure you aren’t caught unawares.
Again, for new investors, this feature may not be too important. For more advanced traders or those who are looking to be very active, however, reviewing a brokerage’s extended hours trading policy is crucial.
Now that you’ve played around with the platform a bit, take a look at the charting capabilities to explore the tools at your disposal. Pay attention to what kinds of data you can plot, how easy it is to switch between charting technical studies and reviewing fundamental or market data, and what you can customize and save for later reference.
What technical indicators are available on the chart? In general, the more the better. At the very least, you should be able to plot basic indicators like volume, RSI, simple moving averages, Bollinger bands, MACD, and stochastics. If any of these basic indicators are missing, it’s time to move on. You should also be able to plot at least a few company events, like earnings reports, stock splits, and dividend payments.
What follows is examples of two different technical menus. This one is a less-than-ideal option. Notice there is no way to plot volume:
This one has an amazing technical selection, which includes multiple options for each indicator type. It also allows you to plot fundamental data and has a search function:
Can you compare different stocks and indices on the same chart?
Can you draw on the chart to create trend lines, free-form diagrams, Fibonacci circles, and arcs, or other mark-ups?
Does the platform have a trading journal or other means of saving your work? Whether you’re learning how to read charts or are a professional trader who takes notes to keep yourself on track, having a way to customize and store your charts is a hugely useful tool. Related questions include:
- In addition to creating trend lines, are you able to draw on the chart simply to highlight important events so you can remember what to review later?
- Can you save your charts after you’ve customized them?
- Can you make notes for later reference?
- Can those notes be placed on the chart to make sure you know what they apply to when you look at it later?
Remember that some of these options may only be available on a Pro or Advanced platform. If you’re an advanced active trader, you’ll likely want a broker that offers all of these options. If you’re a more passive trader, or you’re just not looking to pay a premium for bells and whistles you’re not ready for, sticking to a free basic platform is just fine.
- Can you automate trades through customized rules or imported algorithms?
- Can the platform be customized to recognize specific chart patterns for prices, indicators, and oscillators?
- Can you set up alerts to notify you when the platform finds a matching pattern?
Does the website or platform allow paper trading? Paper trading is a way for investors to practice placing and executing trades without actually using money. It’s a great way for aspiring active investors to practice and for investors of all experience levels to test out new strategies and hone their skills without risking losses.
Does the platform allow backtesting? Another way to test out strategies and get comfortable with the process before putting cash on the line, backtesting allows you to simulate a trade based on the historical performance of your chosen security. It’s a way of placing a hypothetical, retroactive trade and then seeing what would have happened had you executed it in real life.
Step 5: How Well Does the Stock Broker Educate Its Clients?
While a useful and useable trading platform is crucial, you should also take the time to peruse the brokerage’s educational offerings and try out the search function.
If you’re a new investor, you need to be able to search for terms you don’t know or find advice on how to interpret data. If there’s a topic you’ve been wondering about or a metric you don’t completely understand, do a trial run using the search function and see if you can find the information you need quickly and efficiently.
Remember, what’s intuitive and user-friendly for one investor may be a nightmarish maze of fruitless search queries for another, so it’s important to find a platform that you can work with.
Once you’ve spent 20 minutes or so cruising a platform, you should be able to answer the following questions pretty easily. If you can’t, and a quick search of the site for specific answers doesn’t yield the necessary information, it’s likely a sign that the brokerage’s platform is not for you.
Stock Broker’s Quality and Usability
All the educational resources in the world are useless if you can’t access them easily. A good platform or website should provide a wide range of educational offerings, in multiple mediums, to make sure customers are able to quickly and easily find the information they need in a format that works for their learning style. Before we dive into the specific types of educational resources you should expect from a good brokerage, let’s first make sure those resources are user-friendly.
What types of educational offerings does the broker provide? Whether it offers videos, podcasts, user forums, or written articles, the format needs to work for you.
Where does the information come from? If the broker syndicates work from other sites, make sure those sites are reputable. If the site has a blog or other contributor content, then make sure the contributing authors have experience and authority you can trust.
How easy and intuitive is the site or platform to navigate? Make sure getting from a research page to the trading screen is a simple process. You don’t want to feel like you’re clicking in circles. Make sure different topics are easy to locate on the site.
Does the broker offer resources for beginners? These can include glossaries or how-to articles, fundamental analysis, portfolio diversification, how to interpret technical studies, and other beginner topics.
How effective is the platform’s search function? You can figure this out by typing in a common investing term or searching for topics you have questions about. How quickly was the search function able to retrieve the information you needed? Was this information immediately visible, or did you have to click through a few pages to get to it?
Here’s an example of a search function that’s not user-friendly:
While Vanguard does allow you to plot the relative strength index (RSI) with its charting tool, its search tool doesn’t seem to recognize the term.
Is there ample analysis for each security? This should include analyst ratings from multiple sources, real-time news items, and applicable market and sector data.
Is there sufficient fundamental data available? Stock profiles, for example, should include historical data for the issuing company, like earnings reports, financial statements (like cash flow, income statements, and balance sheets), dividend payments, stock splits or buybacks, and SEC filings. There should also be information about any insider trading activity.
Is there market data for the U.S. and foreign markets? What about industry and sector data? How deeply are you able to dive into the big-picture conditions surrounding market performance?
Step 6: Ease of Depositing and Withdrawing Funds
Especially if you’re investing to supplement your regular income, it’s important to know how easy it is to move money in and out of your brokerage account. If you’re looking to employ a more set-it-and-forget-it strategy, being able to withdraw funds may not be as big of a concern. Still, life often throws us things we don’t expect, so it’s prudent to review the deposit, withdrawal, and funds settlement terms of any brokerage you consider.
How can you deposit money into your brokerage account? Find out if you can deposit funds via check, ACH transfer, wire or credit card (this isn’t necessarily recommended, but it may still be an option).
Make sure you verify whether or not there are any fees associated with these options – though most brokerages don’t charge for deposits.
How long does it take for deposited funds to settle? If you’ve spotted an amazing trade entry but you don’t have enough cash in your account to execute it, settling times will suddenly become very important. Verify how many days it takes for deposited funds to be available for investment.
Settlement times may vary depending on the source of the deposit. Note that you may see longer settlement times if you maintain a low balance or don’t trade very often.
Does the brokerage offer regular checking or savings accounts that can facilitate swifter transfers? Are they free? Are they FDIC insured? If so, it might be easier to leave funds in a linked banking account so that they can be moved more quickly to your brokerage account if and when you need to bulk up your investment account.
How long does it take funds from the sale of your investments to settle? Make sure you check on settlement times for the different types of securities you will be trading.
What about dividend or interest distributions? How quickly are those funds available for investment? For withdrawal?
How easy is it to withdraw funds from your brokerage account? Find out if you can withdraw via ACH transfer, wire or check and how long it will take for those funds to reach your bank account. Also, check to find out if there’s a fee for withdrawal.
Does the brokerage offer the option of a debit or ATM card attached to your account? Sometimes this is offered for a brokerage account, and other times you need to open a linked checking or savings account to access this option. If you do have the option of a card, find out which ATMs can you use and if there are any fees associated with card use.
Step 7: Customer Service
By now, you’ve likely narrowed your options to one or two brokerages that really blow you away in terms of resources, features, and usability. Whether you’ve found your perfect platform or you’re still on the fence, take just a few more minutes to peruse the Help section of the brokerages you’re considering.
If you’re a new investor and you’re feeling overwhelmed, make sure you can get in touch with service staff quickly and easily. If you’re technically challenged, make sure the tech support team is easy to contact and available round the clock.
While these items won’t make or break your brokerage decision, it’s still important to ensure you understand how to get help when and if you need it.
- Is there a dedicated number you can call to speak a human for trade assistance?
- Make sure you are aware of any additional fees for call-assisted trades.
- Is there an automated number you can call for basic queries?
- What about general help? What are the call-in hours for representative assistance?
- What are the hours of operation for phone lines? Can you call 24/7, or are the phones only staffed during normal business hours?
- For those who are interaction averse, is there an email address you can use to receive prompt assistance?
- Does the brokerage use a secure internal messaging system for important documents and account queries?
- Does the website have an online chat option for immediate assistance?
- What if you have a basic question but don’t want to bug a representative? Is there a searchable FAQ section that answers a wide range of questions?
- What about tech support? Are there dedicated phone lines, email addresses, or chat systems for accessing technical assistance?
Step 8: Get Going and Next Steps
We know it can be tempting to just sign up for whichever brokerage has the most aggressive ad campaign, but successful investing requires attention to detail long before you place your first trade.
If you’re looking to make trading a long-term hobby, a future career, or just a means of bulking up your retirement fund, then it’s important that you use the tools and resources that will set you up for a successful and enjoyable experience.
By following this in-depth guide, you’ve hopefully found the platform that will best serve your needs, whatever they might be. You can find help sorting through the different brokers on our stock broker reviews page.
Once you’ve singled out your best brokerage, it’s time to get started. Don’t just set up an account and move on to the next thing. Really dive in. Use the educational and research resources available to you, start outlining your investment strategy, and make the most of all the tools at your disposal. You’ve spent valuable time identifying which features matter most to you—now it’s time to put them to work.
6 Crucial Things to Consider When Choosing a Forex Broker
The retail forex market is so competitive that just thinking about having to sift through all the available brokers can give you a major headache.
Choosing which forex broker to trade with can be a very overwhelming task especially if you don’t know what you should be looking for.
The first and foremost characteristic that a good broker must have is a high level of security. After all, you’re not going to hand over thousands of dollars to a person who simply claims he’s legit, right?
Fortunately, checking the credibility of a forex broker isn’t very hard. There are regulatory agencies all over the world that separate the trustworthy from the fraudulent.
Below is a list of countries with their corresponding regulatory bodies:
- United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
- United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
- Australia: Australian Securities and Investment Commission (ASIC)
- Switzerland: Swiss Federal Banking Commission (SFBC)
- Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
- France: Autorité des Marchés Financiers (AMF)
- Canada: Investment Information Regulatory Organization of Canada (IIROC)
Before even THINKING of putting your money in a broker, make sure that the broker is a member of the regulatory bodies mentioned above.
2. Transaction Costs
No matter what kind of currency trader you are, like it or not, you will always be subject to transaction costs.
Sometimes you may need to sacrifice low transaction for a more reliable broker.
Make sure you know if you need tight spreads for your type of trading, and then review your available options. It’s all about finding the correct balance between security and low transaction costs.
3. Deposit and Withdrawal
Good FX brokers will allow you to deposit funds and withdraw your earnings hassle-free.
Brokers really have no reason to make it hard for you to withdraw your profits because the only reason they hold your funds is to facilitate trading.
Your broker only holds your money to make trading easier so there is no reason for you to have a hard time getting the profits you have earned. Your broker should make sure that the withdrawal process is speedy and smooth.
4. Trading Platform
In online forex trading, most trading activity happens through the brokers’ trading platform. This means that the trading platform of your broker must be user-friendly and stable.
When looking for a broker, always check what its trading platform has to offer.
Does it offer free news feed? How about easy-to-use technical and charting tools? Does it present you with all the information you will need to trade properly?
It is mandatory that your broker fills you at the best possible price for your orders.
For example, assuming you have a stable internet connection, if you click “buy” EUR/USD for 1.3000, you should get filled at that price or within micro-pips of it. The speed at which your orders get filled is very important, especially if you’re a scalper.
A few pips difference in price can make that much harder on you to win that trade.
6. Customer Service
Brokers aren’t perfect, and therefore you must pick a broker that you could easily contact when problems arise.
The competence of brokers when dealing with account or technical support issues is just as important as their performance on executing trades.
Brokers may be kind and helpful during the account opening process, but have terrible “after sales” support.
How To Choose The Right Business Brokers To Sell Your Business?
The best way to choose a broker would be to have us shortlist from the 1000+ UK firms to choose one that is best matched to the sector, size, geographical location etc., of your business and fine tune based on fees, fee structures, contractual terms and other criteria you agree with us. Let us match you with a business broker.
However, if you intend to filter brokers yourself, you’ve got a near impossible task of finding the right one. Here’s why.
But if you still want to do it yourself, here’s how to choose the right broker for your business:
- First, decide whether using a broker is right for your business (brokers are not suitable for most businesses!) . more;
- Make sure you choose the broker, don’t let the broker choose you . more;
- Start with a good business broker directory (not a search engine). more;
- Remember to include transfer agents, corporate finance firms, M&A advisors and other professionals who go by different names but provide the same service . more;
- Filter based on sector specialisation and client size . more;
- Reseach each firm thoroughly looking at, for example, their entries in review and feedback sites; professional memberships etc. more;
- Once you are down to 10 or 20, speak with each and get a copy of their contract plus their fee schedule . more;
- Carefully review all the terms, do not let them pressure you into a decision . more.
Decide whether using a broker is right for your business
Business brokers are better suited to the sale of larger businesses. If your business has a turnover of under £1 – 2 million per year, or a profit of less than £100,000 per year, using a broker may not be the best way of going to market.
Reasoning: The best brokers charge a large upfront fee, usually a five figure sum . and this is not economical for smaller businesses. More on broker fees and charges here.
Small businesses therefore, unfortunately, end up with the no-sale-no-fee brokers or the brokers who charge a small advance fee of between a few hundred pounds and a few thousand – your KBS / Knightsbridge (review), RTA (review), Benchmark etc.
No fee (or low fee) often comes with very high risks and a very low probability of sale. Why? It takes a lot of work to sell a business, whatever the size of the business, and if there isn’t a large enough cash sum in it for the broker it just does not make sense for him to spend several hundred hours on your sale.
Please read that again. Contrary to what most business owners think, it takes several hundred hours if one is doing a proper job!
The main risk, however, is that this is a very dangerous end of the market. The UK has 1000+ brokers (including corporate finance and other firms who handle the sale of businesses) and we do have some of the best talent in the world. But at the “smaller deal” end of the market you’re more likely to end up with brokers notorious for exploitative practices. Many owners of small businesses have ended up badly burned.
Even if the broker is an honest player, you’ll probably just end up with your business sitting on the shelf for years! Why? Because it’s not easy selling a small business. It takes a lot of smarts, hard work and creativity (in addition to the time investment required as described above).
The lower end brokers’ modus operandi of posting the business online and sitting back . doesn’t work, and this is evidenced by the fact that over 95% of the businesses they take on will never find a buyer. For some brokers, the figures are even worse.
Many of the brokers taking on smaller business sell fewer than 2% of the businesses they take on. The UK’s largest broker manages to sell just 5% of the businesses they take on. Do not believe all their boasts about how effective they are at selling businesses! They aren’t. And here’s how you can work out a broker’s REAL “success rate” before signing up with them.
I’ve got some reviews of brokers here, but before signing up with any business broker, or business transfer agent who’ll take on a sub £1 million business, my advice is to spend many hours, even days, researching the broker and speaking with their previous clients!
All is not as rosy as it seems and not half as rosy as these brokers make it out to be when they visit you to give you a valuation and tell you how brilliant they are.
So how do you sell a small business? If yours is a smaller business, and you want to discuss better ways of going to market, get in touch.
You choose the broker, don’t let the broker choose you
Some of the best business brokers in the UK do not advertise at all! They are so good at what they do that they get a steady stream of clients referred to them from the likes of accountants and other professionals. In fact, and speaking as someone who matches businesses with brokers, I often find that these top brokers are very selective in which businesses they take on!
Some of the worst business brokers, on the other hand, run extensive call centre operations. They call every business owner in the yellow pages to say that they have buyers desperately looking to buy businesses! You’ve probably already had a call or two from brokers like these.
Their “eager buyers” are a myth. But, yes, they likely have an old and tired mailing list they send a newsletter out to every week!
Selling what is probably your most valuable asset – your business – is not to be undertaken lightly. It pays to carefully choose a partner to assist you with the highly skilled task of preparing and presenting your business to buyers, getting the right buyers in, negotiating prices and terms with them etc. It’s not something you can leave to just anybody who calls himself a business broker. Not even if he’s doing it for free. Especially if he’s doing it for free (ie with no advance fee)!
Start with a good business broker directory (not a search engine)
The brokers who appear at the top of Google are not necessarily the best brokers. They are the brokers who’ve spent the most on Pay Per Click ads or the ones who’ve invested the most in Search Engine Optimisation.
The best brokers aren’t to be found in the first 100 or so pages of the Google results! Some of them don’t even have websites.
That’s why you need to start with a good business broker directory (see our comments on business broker directories here). Of course no directory will tell you which brokers are the good ones, which brokers are right for your particular business etc., but we’ll do that research later.
Remember to include transfer agents, corporate finance firms etc.
Don’t forget that many firms providing broker services don’t like to be called brokers. They call themselves corporate finances houses, M&A advisors, investment banking consultants, corporate brokers, transaction advisers, boutique investment banks and all kinds of other names. So if you limit your list to just business brokers and business transfer agents you’ll be excluding some of the top talent in the UK.
Some of the large accountancy firms have divisions specialising in the sale of businesses, firms like Ernst & Young, PwC, Deloitte, KPMG etc. have dedicated “corporate finance” arms. Even the second tier accountancy firms have huge corporate finance operations – names like Hazlewoods, Mazars, BDO and about 50 others.
Then there are ex directors and MDs of top accountancy firms who’ve broken away and set up independent corporate finance firms that have become hugely successful – MCF, Nash & Co, Gambit, Argento, Strategic, JDC, Verde, West Hill, AGI, Atlas, Bishopsgate, Cavendish, Goldsmiths, Optima, Opus, Prism, PEM . and over 100 others!
As with accountancy firms, so too with large corporate law firms. Many of them have branched out into handling the complete process of selling a business. Note that many of these firms can’t be found in directories catering for business brokers, corporate finance firms etc.
The most comprehensive database of all UK firms assisting in the sale of businesses is our own database. Unfortunately, we do not make this data public, we use it internally to assist with the broker matching service we provide as there’s a lot more to getting the right broker than simply having a list and phoning around.
Filter based on sector specialisation and client size
Many brokers will insist that sector specialisation is a non-issue, that selling a business is selling a business and it doesn’t matter what industry that business is in.
My take is different. A broker who sells just fish and chip shops, for example, would have over the years built expertise in selling that particular type of business and in overcoming typical objections and hurdles buyers in that industry raise.
Further, for every fish and chip shop they’ve sold in the past they’ll have at least 4-5 buyers who expressed interest in the business but did not proceed with a transaction ie. a bank of known buyers. A broker who deals with businesses in just one sector tends to have a good network of buyers interested in businesses in that sector.
But size is important, too. A broker who deals in £1m – £5m businesses (lower mid-market) wouldn’t be best placed to sell a mid market business of, say, £50 million. Similarly, while it may win you boasting rights to claim that Goldman Sachs is representing your business, GS would be completely the wrong type of broker for a business with £2m in turnover.
If you want to get the best price for your business, you need to read our article on sector specialisation and finding a sector specialist broker.
Research each firm thoroughly
If you’re doing this yourself, and have done all the research above, you should have a list of at least 40 – 50 names. Now comes the hard slog. You need to investigate each one.
You could start with reading reviews at various feedback and review sites including our own reviews. You could also try searching for each broker’s name along with terms like “complaints” and “scam” to flush out articles, blog posts and forum threads complaining about the broker in question.
Sites like CEBTA.org are also good sites to visit as part of your research.
When verifying membership of professional bodies such as the International Business Brokers Association (IBBA) etc., do not assume that membership of a professional body is a green flag you can follow blindly. You need to verify what it takes to become a member of that body and/or whether it is given easily to anybody who comes up with a few quid for the rights to use their logo.
Once you’re down to 10 or 20, speak with each one
Now that you’re down to the last few, you can afford to call them and/or meet with each one. Let them pitch for your business. Take notes. Make no commitment.
While they’ll be keen to shove fancy brochures in your hand, they’ll be less forthcoming with a copy of their contract (engagement letter). Insist on one, and a quote for their services, and have these properly vetted by a competent lawyer.
It cannot be emphasised enough that some of those contracts look quite innocuous, but they’ve been worded to protect the broker’s interests, not yours.
Carefully review all the terms, do not let them pressure you into a decision
Remember to never be rushed into a decision. Something this important can always wait a few days while you mull it over and/or get expert opinion.
Conclusion: If you wish assistance with finding the right broker, see what we can do for you. Apart from matching you with the right talent to sell your business, our service also saves you significant amounts in broker fees (far in excess of what we charge), keeps your potential sale more private, gets you better terms than you could get yourself, improves the price you obtain for your business and reduces the time it takes to find a buyer. Read more about our service here.
But, yes, it’s a paid service
If you have less than Or if you still just want to find a broker, try the free iTABB business broker matching service.
How to Choose a Real Estate Broker
As a new real estate licensee, the first step you’ll need to do is choose a real estate broker. The process of picking a broker can start early, as some states require that you be sponsored by a broker when you take your real estate exam. Don’t let the process of finding a real estate broker to work for intimidate you. We’ve put together some information to help you learn how to choose a real estate broker that’s right for you.
How do you select the best brokerage for your new career? Review the following five steps to learn how to choose a real estate broker.
Step 1: Ask about the commission split
Most real estate agents get paid on commission. When you’re not selling, you’re not getting paid. But when you’re selling, you’re going to split the proceeds with your broker. Brokers offer different commission structures. (And some brokers offer salaried positions, but these are few and far between.) While factors like company culture, resources, market share, reputation, and support will also come into play, you’ll want to pick a brokerage that offers you a commission split you can live with—keeping in mind that commission splits often get better with experience and sales volume.
Here’s how commission splits work: Let’s say you sell a $300,000 home and the average commission in your area is 6%. That 6% is first split between the buying and selling agent. Now you’re down to 3%, which works out to be $9,000. Next, you’re going to have to share that with your broker. If you’re on a 60/40 commission split, you’re taking home 60% of that $9,000, or $5,400. Of course, this is before expenses and taxes.
What’s a good commission split? That depends on the business, your market, the broker’s support and resources, and a number of other factors. Just make sure you understand the split and how you might get a bigger percentage over time.
Keep in mind that some brokerages these days are offering real estate agents a salary and benefits, or a hybrid model, so you might want to shop around if this approach to compensation appeals to you.
Step 2: Evaluate the brokerage culture
Before you choose a real estate broker, ask yourself: What kind of company do I want to work for? How much support do I want from my coworkers? Just like other businesses, real estate brokerages develop a company culture that informs the way they do business. Are you looking for a small, mom-and-pop brokerage with an intimate, family-like brokerage culture? Or would you prefer a big-box franchise brokerage that’s more likely to let you fend for yourself? Are you looking for weekly get-togethers and company caravans on open house day? The best ways to know and understand a company’s culture are to chat with agents who work there or attend a company function.
Step 3: Decide between a franchise or independent brokerage
When it’s time to choose a real estate broker, another big question to consider is whether you prefer to work for a franchise or independent brokerage. Big-name brokerage houses like RE/MAX or Keller Williams have offices all over the country. A mom-and-pop brokerage might have been serving a single community for generations. Franchises tend to exert more control over their agents than an independent firm, but they usually offer more support and training. Independent firms are usually locally based and consist of a small- to mid-size team. The benefit of working for an independent broker is that you have more freedom to conduct your business the way you want to.
The National Association of REALTORS® reports that the majority of REALTORS® (53%) choose to work for independent firms. If you relish your independence and dislike corporate culture, an independent brokerage may be the way to go. The main advantages of a franchise are the many resources they offer in terms of information and marketing support—and the name recognition.
Step 4: Learn its reputation and niche
When you start your research, begin with a simple Google search as if you were a buyer. Search for “homes for sale in [community name]” and see who comes up. You want the brokerage you select to have a strong market presence and a quality reputation. If they have a high market share, you can depend on them to help you find leads. And we all know how important a brokerage’s reputation is.
Just as important is the niche your brokerage is in. Studies show that the right brokerage can triple your income. The right niche for you will probably be a combination of your interests, lifestyle and the opportunities available in your area.
Step 5: Make sure it will offer support
Some brokerages are very hands-on and offer extensive mentoring, free training, and marketing collateral. Other brokerages are just places to hang your hat while you get to work growing your own business. You might take the occasional sales training class or meet for a monthly brokerage meeting, but otherwise, you’re on your own. You’ll find many variations between the two extremes, and it’s largely a matter of finding the corporate culture that you prefer.
When you’re ready to choose a real estate broker, keep these considerations in mind. Finding the right brokerage involves research and interviewing. Don’t be afraid to sit down with several real estate brokerages in your area to see who fits the best with your learning style and business goals.
Why it’s necessary to choose a real estate broker
Why is broker selection so important? In your first year as a real estate agent, you’ll have a ton of questions, uncertainties, and getting-your-feet-wet experiences. You’ll need to choose a real estate broker that will be there with you each step of the way.
When you’re first starting out, you won’t have the funds to compete with the big real estate brokerages when it comes to marketing, lead generation, and conversion. You’ll need a broker’s help getting your name out there, and you’ll want to use the broker’s tools and systems to kick start your career.
5 Things to Consider when Choosing a Stockbroker
What makes a good stockbroker? Is it low commissions? A stable trading website? Good customer support?
The role of stockbrokers has become more prominent now than ever. With stock trading in the Philippines skyrocketing in recent years, getting a good stock broker is as essential as making the right trades.
According to the Philippine Stock Exchange (PSE) , around 1% of the Philippine population invests in stocks, as seen in this report on the Profile of Filipino Stock Traders. As more and more Filipinos discover stocks as an important investment asset, separating good stockbrokers from the bad ones also becomes a challenge.
Why choose a good stockbroker?
Well, for one, no retail investor can trade stocks without the use of a broker. Regardless if you use an online platform or deal with a live person handling your trades, an account must still be opened first with a stock brokerage firm before you can start investing in stocks.
Stock brokerage companies play a very important role in the stock trading process: they handle your cash.
Imagine if the stockbroker files for bankruptcy, disappearing together with your money. That would surely be a big hassle. Although you won’t instantly lose your money, especially if your cash is already invested in stocks, it would be time-consuming to ensure that you will get your money back.
What to consider when choosing a stockbroker?
So what must you evaluate before opening an account with a stockbroker? For us, we believe that you must consider these five (5) things when choosing a stock brokerage firm.
1. Broker’s Commission
Whenever you buy or sell stocks, you pay a certain fee to stock brokers. Of course, the lower the fees, the less you pay which means you get to retain more cash. The broker’s commission is something you have to pay regardless if you make a profit or loss in stock trading.
In the Philippines, based on our research, almost all online stock brokers currently charge 0.25% broker’s commission. They are pretty much comparable in this regard. Other brokers, however, also offer live assistance and sometimes assign you a personal account handler, and in turn, they charge you a higher broker’s fee.
For an idea of how trading fees and broker’s commissions affect your stock trading transactions, refer to our article on Fees and Charges when Buying or Selling Stocks.
2. Stability and Speed of Trading Website
A stable online trading website is critical because a website’s downtime could spell huge losses, especially during times of trading volatility. Imagine wanting to sell a stock to lock in a profit only to face a “Page Not Displayed” error when visiting your broker’s website.
The good thing is, most brokers offer an alternative in case there are access problems with the website. They give you a telephone number which allows you to talk to a live broker who can execute your trades. But that would take time and could eat precious minutes that you could have used to execute an important trade by yourself.
Aside from website stability, also check the speed of a website in loading and in executing your trades. Prices may change in a split second and if it takes time before the page loads or your trade is processed, the price might have already changed and your trade might not go through.
3. Ease of Funding and Withdrawing your Account
Another critical factor to consider is the ability to fund your account and to withdraw your money easily.
Look for brokers that have partnerships with local banks, enabling you to make easy fund transfers, sometimes even through online banking. Some brokers, however, accept only cash or check payments, requiring you to make a personal visit to their office every time.
Do note that withdrawals typically take between 1 and 3 days before the cash is transferred to your account or a check is made payable to you.
4. Stock Researches and Trading Tools
A few brokers offer free stock researches and reports. These resources give tips and recommendations helping you make informed decisions when trading stocks. They are useful in providing guidance with your trades.
A caveat, though: not all reports are reliable and are sometimes made just to “promote” or “hype” a stock. Make sure you distinguish between objective reports and hype reports before believing everything you read in the reports. View them primarily as guide, not an infallible recommendation with 100% accuracy. Still, having access to stock research is more helpful than not having access to researches at all.
If you’re into short-term trading and you’re knowledgable in doing technical analysis, you’d also like to have access to useful charting tools. These allow you to make your own technical analysis, so check out what charting tools and services, if any, that the broker’s website provides.
5. Customer Support
Finally, consider the customer support offered by the broker. If you have issues regarding your trades or questions about your account, a reliable and accessible customer support is, of course, desired.
Customer support can be email-based or phone-based. Assess if they reply to you quickly or if it takes days before you receive a response from them. If it takes forever, perhaps it’s time to change brokers.
Time now to tell us your preferred broker! Vote in our poll below and write your opinions about your brokers in the Comments section!
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