MoneyMerc

This post isn’t about promoting a brokerage house – it’s about choosing the right place to put your money, for efficiency and convenience. Picking the right place to put your money can save you lots of headaches and hours and hours of time through the course of your investing life.  Here’s my thoughts on the process.  Please submit a comment below if you really like (or don’t like) your broker, and tell us why.

Must haves:

1. Excellent customer service
2. Easy-to-use website and online trading ability
3. Ability to link accounts to your checking, to transfer money
4. Auto-investing features, with no fees

There are tons of competing places to hold your investments, the biggest include Vanguard, Fidelity, Charles Schwab, TDAmeritrade and E*Trade.  You can read reviews of these here and here.  Most large brokers out there today have all these features.  In addition, your specific situation might help you decide.  In my case, we already had two 401(k)s and an employee stock purchase plan at Fidelity, and since the companies providing those plans don’t provide a choice, Fidelity was really a no brainer for my brokerage account.

But there’s one more reason why I really like Fidelity.  They have a feature called “Full-view” – just put in your account login details of all non-Fidelity accounts (even your work 401k, your mortgage), and all of the holdings are sucked in to give you a full picture asset allocation.  This saves tons of time when re-balancing your allocation.  It’s sort of like Mint, which I’ve recommended before, but covers ALL types of accounts.

Other criteria that you might consider:

• Trading commissions – even though I don’t recommend trading individual stocks, this can matter for some people.  Compare fees, and also check if your employer has a discount commissions agreement with any brokerage firms.
• Employer requirements – some companies (mostly banks and other finance institutions) require all employees to use one of a specific set of brokers; don’t forget to check this!
• Statements – all statements are not created equal.  If you can, get a sample statement, and see if it makes sense to you.  There is nothing worse than not being able to easily understand what investments you hold.  Also check if statement-linking is available – it’s nice to get one statement from all of your accounts at a brokerage.

Do you really like your brokerage account?  Tell us about it in the comments.

[Update: One reader pointed out that Fidelity has been known in the past to invest in companies which support the Sudanese government.  Two points there:

1. This post is about picking the brokerage that is best for you - do your own research, and decide for yourself.  As I said in the first line, I'm not plugging for Fidelity here
2. That said, I support socially responsible investing in general, and therefore as a Fidelity user  researched this, since I hadn't heard about it.  Turns out that several of Fidelity's funds had holdings in PetroChina and Sinopec, which operate in the Sudan to pump oil, which in turn generates revenue for the Sudanese government.  Funds known for investing in these companies include the Contrafund and Diversified International.  According to 30-Sept-08 holdings reports, neither of these funds hold these companies.  If socially reponsible investing means something to you, do your homework on your investments.  Look for sites like this, which have screening tools to check your funds.  Since I choose the investments in my account, and can understand their holdings in detail, I'm not that worried about using Fidelity as my investing vehicle, given all it's other positives.

]