15 Questions to Ask Discount Brokers

Thinking of opening a new account with a discount broker? Money Central suggests 15 questions you need to ask a discount broker before you invest any money with the company:

• What is your minimum opening balance requirement?
• Do you offer 24/7 customer service by telephone?
• Do you have a walk-in office in my area?
• Are your accounts insured by the SIPC?
• Do you offer free S&P stock reports?
• Do you offer any free broker’s analyst research reports?
• How many mutual funds do you offer, and how many of those are no-transaction-fee funds? What is the fee for trading transaction-fee funds, and do you charge two transaction fees if I sell one fund and buy another at the same time?
• What is your minimum mutual fund initial purchase requirement?
• What is the minimum holding period for mutual funds without incurring a penalty?
• I plan to maintain a $_____ minimum balance and do around ___ trades per quarter.
• Given my situation, how much do you charge for market orders and for limit-order Web trades? Also, do you charge a separate order-handling fee, and if so, how much?
• Given my situation, do you have an account maintenance fee, and if so, what is the minimum trading frequency and/or account balance requirements to waive the fee?How much do you charge for trades placed via your touch-tone phone system, or for orders placed with a live broker?
• Do you offer a dividend reinvestment plan?
• Can I download my account details from your site to my MSN Money or Quicken portfolio?
• Do you charge an IRA maintenance fee, and if so, how much?

Based on my experience, these are good questions. I've had accounts with Schwab, Ameritrade, and Etrade and wish I'd asked some of them these questions early on.

As far as discount brokers themselves, I don't have a recommendation for you. I still use Etrade and Ameritrade, but don't really love either one of them. How about you? Does anyone out there use a discount broker that they really like? If so, please share it with the rest of us in the comments below.

Comments

[Tim Struck]

I was 100% happy with HarrisDirect. Harris Direct had great service and a nice website that was very easy to navigate. Then my account was transfered to E*Trade when they bought HarrisDirect. I am 100% unhappy with E*Trade. In the first month, my average customer service hold time was 1 hour. I have even had unauthorized trades made. When I call customer service, I am never satisified with their help. Due to all the issues, I requested that E*Trade waive my $60/account fee to close my account. I have 7 separate accounts (2 Roths, 1 IRA, 3 Education Savings Accounts, and a taxable account). So for me to transfer out of E*Trade it would cost me $420. E*Trade refused to waive the closure fees even with all of these issues (some of them they admit to). Warning ... DO NOT open an account at E*Trade.

[Mike]

This is great info. for any beginner or intermediate investor looking for some advice on online brokers. I use sharebuilder.com, but they do not provide mutual fund transactions, and is more for a small-time, automatic investor (which I am). Although you can trade market and limit orders. Great post!

[sm123123]

Has anyone gotten out of etrade w/out paying the $60.00 fee. Etrade has been HORRIBLE. Literally 99.99% of the time that I log in they have done something screwed up to my account....removed (lost)my cash balance, charged a fee for a merger that happened but misplaced the $850.00 I should have gotten from it!, charged another random fee, didn't do the drip I signed up for in January (they screwed that up in Jan, Feb, and AGAIN in March). I hate them and have been going back and forth on email about all their errors and confusing fees since December. I am totally fed up and want to go to Scottrade. How can I escalate this appropriately to not pay $60.00 to get out? My thinking is why should I have to pay, when they have already cost me so much money with all their stupid mistakes?