Online Stock Brokerage - Selecting an Online Stock Broker

• Is pricing important to you?
• Which investment products can you not live without?
• What level of customer service are you looking for? Check out the tips below for more detailed information on each.

Choosing the Right Online Stock Broker

There are many online brokerages out there, all itching to help you with your investment portfolio. Hey, we're not any different.  We'd love your business, but we realize you may need tips to help you along your journey.  Picking the right online stock broker (also known as a discount broker) is one of the most important decisions an investor makes. It can have a real impact on your investment portfolio returns. At Zecco we want you to have a great stock trading experience, no matter which online stock brokerage you choose.

As with most decisions, choosing an online stock broker is about prioritizing your needs and getting what's most important to you. Your top choice for an online broker may not have every last thing on your wish list but be sure you're getting your highest priority items. Here are eleven things to look for when choosing an online stock broker:

1. Choose a true online discount broker. Most brokerage firms offer online access, but only a handful really specialize in online, discount brokerage. Often full commission firms will hook you up with a stock broker - they may call him an account executive or investment advisor. That is fine if you need or want advice, but you pay more for this service. It can be very expensive, even if you are making your own decisions. Also, keep in mind that the stock broker's real job is to generate revenue for the firm, whether you make money or not. Look for a firm whose primary business is offering an online, discount stock brokerage to independent investors like you.

2. Affordable trading commissions. Commissions are a normal cost of investing, but you don't want most of your profit going to brokerage fees. Choose a discount broker that offers low commissions (ideally flat fees for stocks). Some brokers will offer some number of free trades to switch. That's good, but read the fine print. Often these offers have restrictions that reduce their real value such as limits on how quickly you must use your free trades. Zecco Trading, for example, 10 free stock trades every month when you maintain a $25,000 balance or execute 25 trades each month. Otherwise it's just $4.50 per trade. See details. Compare Zecco Trading's costs with other brokers .

3. Minimum deposits and hidden fees. Most online brokers require some sort of minimum deposit to open an account. Can you afford that $10,000 account minimum? No? Then that stock brokerage isn't right for you. Other stock brokers have $0 minimums, but charge maintenance fees when your account is below a certain amount. Be sure you read the fine print on any offers. Your best bet is to look for an account with a reasonable minimum deposit, and one that doesn't come with outrageous maintenance fees. You can also look for an online broker that provides a benefit for maintaining a certain balance. Zecco Trading doesn't have any minimum deposit requirements, just 10 free stock trades every month when you maintain a $25,000 balance or execute 25 trades each month. Otherwise it’s just $4.50 per trade. See details.

4. Online accessibility. Do you need special software to trade? Or does your online broker offer a Web-based account that you can access from any computer with Internet capability? Look for easy account access using technology that allows you to make investment decisions anytime, and from anywhere. Also see if the firm supports new technologies to deliver service such as mobile browsing and live chat if these are important to you.

5. Broker-assisted trading and customer service. Another important thing to look for is whether the online broker also offers broker-assisted trading. It is not always possible to be near a computer when you want to trade. Sometimes you just have questions about how to place a certain kind of order. You should not have to spend half an hour on hold, listening to elevator music. You want a truly responsive stock broker, with helpful representatives. You should test an online broker's customer service by making calls to the customer contact number and chatting with representatives.

6. Message Boards or Forums: Do you like to get ideas, thoughts and opinions from like-minded investors? They you may find value in having an investment community at your online stock brokerage. Some newer companies are offering these features for free, you just need to decide which you can get the most value out of and how much integration you want with the message boards or forums and your online stock brokerage.  Zecco offers a free investment community called ZeccoShare where you can learn from like-minded investors. 

7. Information, education and tools. Does it matter to you if your online stock broker offers proprietary information, education or tools? Depending on your needs, you may like educational information, research on stocks and options, or streaming quotes and other market data all in one place. You could also be in the camp that is okay using other free sites to get those tools. If so, be careful because you may wind up paying for features and tools that you don't want.

8. Investment products. Not all online stock brokers offer the same investment products. Some strictly offer stocks and options. Others have more expanded offerings, including mutual funds and bonds. Some brokers can provide access to commodities, currencies or futures as well. You should also check to see whether the online broker offers retirement accounts, trust accounts and checking account access to your money. Figure out which online brokerage firm offers more of the products you want.

9. Margin rates and interest. If you trade on margin, you borrow from the stock brokerage firm to purchase investments. Check brokerage firm's margin interest rates. Even a seemingly small difference can actually add up to huge savings over time.

10. Check them out. One of the most important steps in choosing an online brokerage for stocks and other investments is a background check. Do not give your personal information - and money - to any broker before you check the credentials. There are two places to check on your online stock brokerage firm:

• Financial Industry Regulatory Authority, Inc. (FINRA). FINRA regulates securities firms in the U.S., and is the largest non-governmental regulator. You can go to the FINRA website and check up on your online broker.
• Central Registration Depository (CRD). This is accessed through your State Securities Agencies. You can visit NASAA's website to find out how to use your state agencies to access the CRD.

11. SIPC Insurance. There is no guarantee that your investments won't lose money. However, investors should be protected against the failure of a brokerage firm with insurance from the Securities Investor Protection Corporation (SIPC). Reputable brokerage firms are members of SIPC. Many carry additional insurance to cover investors above the SIPC limits. For more information visit the SIPC website.

Happy hunting, and happy trading!