Choosing a Broker

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Choosing a Broker

Postby dan35 » Wed Nov 28, 2012 8:55 pm

Hello,

I'm about to open an account. My first account will be a Roth IRA, but then I'll probably open an additional account at some point in the future. I was curious what steps you all went through with choosing your broker. So far, I've narrowed it down to Schwab or TD Ameritrade, what have been your experiences with these two brokers? The 100 commission free ETFs are looking pretty appealing with TD Ameritrade. However, Schwab has about 30 commission free ETFs and the expense ratios are even lower on some of theirs.

Thank you for your help!
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Re: Choosing a Broker

Postby livesoft » Wed Nov 28, 2012 9:44 pm

If you are worried about cost, the best broker is FREE. And the only broker that has everything FREE is WellsFargo with a PMA package. Fortunately, the best broker (WF) also has outstanding trade execution and a serviceable web site. Unfortunately, I think one needs to have $50,000 in assets (stocks, ETFs, mutual funds, or a few other things) in all your linked accounts to qualify for free-ness. A new Roth IRA is not gonna make it, but maybe you have some other IRAs or accounts that can help get you there.

But you asked about experiences, .... We have some accounts at TDAmeritrade since about 1994. I like them because they have a local office and also don't charge commissions for the things we buy/sell there. They also give us free money. They have been very helpful transferring stock shares to charities and to our children. I have posted some real-time charts from TDAmeritrade on the forum. For example, at the bottom of this page are 3 links: http://www.bogleheads.org/wiki/Orders
Last edited by livesoft on Wed Nov 28, 2012 9:47 pm, edited 1 time in total.
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Re: Choosing a Broker

Postby Johm221122 » Wed Nov 28, 2012 9:45 pm

Welcome to forum,
What do you want to buy?Index funds or etf's, individual securities,or something else.Do you need something other than vanguard index funds?
Try boglehead philosophy
http://www.bogleheads.org/wiki/Boglehea ... philosophy
"Rather than trying to pick the specific securities or sectors of the market (US stocks, international stocks, and US bonds) that will outperform in the future, Bogleheads buy funds that are widely diversified, or even approximate the whole market ."
John
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Re: Choosing a Broker

Postby dan35 » Wed Nov 28, 2012 10:13 pm

Thank you for your replies. Unfortunately, I don't have $50,000 to move to Wells Fargo. I will keep that in mind for the future though!

John, I plan on getting into ETFs and TD Ameritrade has some no commission Vanguard ETFs as well as other funds that have low expense ratios. Something that is important to me is free DRIPs, which I know both Schwab and Ameritrade do.
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Re: Choosing a Broker

Postby livesoft » Wed Nov 28, 2012 10:23 pm

We own Vanguard ETFs in our TDAmeritrade accounts. And we are automatically re-investing the dividends in the IRA at TDAmeritrade. But I thought almost all major brokers did free dividend re-investing, so that is not distinguishing feature. However, some brokers make the dividend available a day later than others. For example, Vanguard is always a day or two late compared to my other brokers.

What is a distinguishing feature is whether the broker sends one a complete and accurate 1099B and 1099DIV each year. That won't apply to your Roth IRA though.
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Re: Choosing a Broker

Postby KarlJ » Fri Nov 30, 2012 9:49 am

Schwab is inconsistent over time, so be prepared for a roller coaster of changing rules and policies if you establish an account there. TD Ameritrade is a good choice for an IRA with competitive new issue CD rates and commission free ETFs, including many from Vanguard. As noted, Wells Fargo PMA has a $50K minimum, but this poses problems for an IRA in distribution when the balance falls below $50K and a ton of fees kick in. Fidelity is best for IRAs IMO as suite of tools for retirement investing is top notch combined with low commissions and reliable service.
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Re: Choosing a Broker

Postby Default User BR » Fri Nov 30, 2012 1:09 pm

KarlJ wrote:As noted, Wells Fargo PMA has a $50K minimum, but this poses problems for an IRA in distribution when the balance falls below $50K and a ton of fees kick in.

No, the fee that would kick in is the PMA monthly fee. Now, you don't want that. But, it's 50k of total assets, so if you keep a regular brokerage account that you move the distribution to, there's no problem. Of course, if you're spending the distributions that's another thing.


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Re: Choosing a Broker

Postby KarlJ » Fri Nov 30, 2012 7:02 pm

Default User BR wrote:
KarlJ wrote:As noted, Wells Fargo PMA has a $50K minimum, but this poses problems for an IRA in distribution when the balance falls below $50K and a ton of fees kick in.

No, the fee that would kick in is the PMA monthly fee. Now, you don't want that. But, it's 50k of total assets, so if you keep a regular brokerage account that you move the distribution to, there's no problem. Of course, if you're spending the distributions that's another thing.


Brian


The two main fees that come to mind are $30 a month for checking, plus a $30 annual fee for the IRA, if total for PMA accounts falls below $50K, plus the annual 100 free trades go away and other fees come into play as well. As you indicate, if the IRA distributions are not spent and kept within the PMA umbrella the fees would not be triggered. However, this year the PMA minimum was raised from $25K to $50K, and there is no guarantee the future raises are not in the works, in fact the PMA minimum to avoid fees some years ago was $250K.

Edit: The link in Brian's reponse indicate that the rules for PMA accounts are more convoluted than I previously thought. Here is an example of a clear as mud statement on fees https://www.wellsfargo.com/investing/styles/wt/com_fees/fees
Last edited by KarlJ on Fri Nov 30, 2012 8:43 pm, edited 3 times in total.
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Re: Choosing a Broker

Postby Default User BR » Fri Nov 30, 2012 7:22 pm

KarlJ wrote:The two main fees that come to mind are $30 a month for checking, plus a $30 annual fee for the IRA, if total for PMA accounts falls below $50K, plus the annual 100 free trades go away and other fees come into play as well.

That's not correct. The 100 free transactions and account fee waivers come with linking the account to the PMA. That doesn't go away if you don't meet the 50K funding requirement. The only thing that happens is the $30 monthly fee on the PMA kicks in.

https://www.wellsfargo.com/checking/pma/


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Re: Choosing a Broker

Postby Edaw » Fri Nov 30, 2012 8:58 pm

If you're thinking of investing only in Vanguard ETFs, I'd recommend using Vanguard as your brokerage as well. All of their ETFs are commission-free through Vanguard Brokerage Services. I have all of my accounts with them. I've had no problems with Vanguard and really like them, and I trust them. So that's my 2-cents worth.
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Re: Choosing a Broker

Postby pkcrafter » Fri Nov 30, 2012 9:23 pm

dan, your first post makes me wonder if you are thinking of trading ETFs rather than buying them and holding. What sort of investing strategy are you going to use?

Paul
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Re: Choosing a Broker

Postby Johm221122 » Fri Nov 30, 2012 9:37 pm

pkcrafter wrote:dan, your first post makes me wonder if you are thinking of trading ETFs rather than buying them and holding. What sort of investing strategy are you going to use?

Paul

This was also the point of my post
Johm221122 wrote:Welcome to forum,
What do you want to buy?Index funds or etf's, individual securities,or something else.Do you need something other than vanguard index funds?
Try boglehead philosophy
http://www.bogleheads.org/wiki/Boglehea ... philosophy
"Rather than trying to pick the specific securities or sectors of the market (US stocks, international stocks, and US bonds) that will outperform in the future, Bogleheads buy funds that are widely diversified, or even approximate the whole market ."
John

US stock markets are very efficient, I would use index funds
John
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Re: Choosing a Broker

Postby EmergDoc » Sat Dec 01, 2012 6:08 am

I opened a Roth IRA at Vanguard. Worked fine for me. I'm still buying mutual funds at Vanguard with it. I'm not sure I understand why you're looking somewhere else. Is there some reason Vanguard doesn't work for you?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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