If you need an experienced brokerage firm to handle your investments, are you always looking for just the generic "dependable knowledgeable guy"? Or do you try to review your specific needs and go for someone who possesses the skills you need for the plans you have with your money? Which would be the right approach? As you would guess, it's the latter. You could look for reviews and ratings guides that describe brokerage firms, you could look at customer satisfaction polls too. These however only go so far. Sometimes, a competent broker who doesn't specialize in anything could be a worse choice than a somewhat less dependable broker who is a specialist in your kind of plan. Choosing among the brokerage firms you have your pick of, you need to first decide what you have in mind - plans for a steady long-term commitment to saving and building, or something more short-term and more action oriented.
Before you pick up the phone and try calling around for recommendations for brokerage firms here are a few questions you need to be asking yourself first. The first is, to know how much money you have to put by in your investments. There used to be discount brokerage firms for the smalltime investor, but they are usually a bad idea, so expensive in fees and commissions are they. The second thing to ask yourself is about the kind of stocks you are interested in. Any broker will easily have access to all the top trades; if your tastes run to the exotic though, or to investments that will be hot one day but are not so right now, you'll have no choice but to pick up one of the full-service brokerage firms. If you believe you will be making trades and swaps often, you'll need a brokerage firm that doesn't really connect its fees and commissions to how often you trade. And of course, if you need proper in-depth advice and discussion sessions over your investments, you have no choice but to pony up for a proper full-service brokerage firm.
Lets say that youre like many of us - you have no more than $5000 or thereabouts to play around with in the markets. Youll need to look for brokerage firms that deal in small sums there are many that wont accept a client for less than $15,000 worth of investments. If its a retirement account that youre after, their requirements may be lower. Did you ever realize that when youre dealing in sums as small as $5000, just the brokerage fees and commissions can easily wipe out any gains you make? Even really simple actions like transferring money or shutting down your account could attract fees, and there are activity fees to think of too. If you find all of this very intimidating, consider dividend reinvestment plans or DRIPs - the price of admission is just $10 a month. The idea is to build your capital up to play in slightly bigger leagues so that you can take advantage of better investment opportunities.
When you get there, in the beginning, it's best to be a steady buy-and-hold investor. You don't want to do anything more than a little maintenance work on your portfolio each year - you'll make sure that there are no underperformers, and you'll keep your eye out for some really good trades; but apart from that, leaving your investments alone is a really good idea for someone who has just stepped up from the little leagues. But if you really are looking for an active investment plan buying and selling left and right, and you need a lot of initial assistance from your broker to learn the ropes, you'll need to look among brokerage firms that offer the full package, or offer financial planning services. When you need a lot of handholding, you'll want to look around not by the name of the firm; you care about the specific broker who works at the firm - someone you can work with. You'll need to pick the person over the firm. Of course, that will cost you; which is the reason why the buy-and-hold plan is best until you really step up into the big leagues.