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What Should I Look For in a Bank to Hold My Brokerage Account

Ask Savvy: What Should I Consider When Opening a Brokerage Account?

SweetPeasMom asked this important question in my Ask Savvy group — have you joined yet?

My husband and I are starting to look at investment and retirement accounts. Right now, we've decided on a Traditional IRA. Does it make a difference where we get an IRA? If so, what do we want to look for in choosing the bank/credit union/etc?

To see my answer just

It's great that you and your husband are beginning to set aside money for your future, and I know it can be daunting sorting through the various companies capable of holding your brokerage accounts. The two biggest questions you need to ask yourself are how much are you willing to pay in fees, and how much customer service do you want or need? Also, make sure that any company you choose is a member of the Securities Investor Protection Corporation (SIPC) so that your money is protected if the company goes under.

Fees are extremely important because of the impact they have on the overall growth of your account. Retirement accounts are all about long-term growth and you want to avoid stunting it with expensive commission fees, trading fees, and account maintenance fees. There are often other potential charges like inactivity fees, so shop around and make sure you gather all of the information you can — you could even create a quick and easy spreadsheet with all of the details in order to keep it all straight.

You need to determine which of these types of brokerage companies best suits your needs: full service broker, discount broker, or online broker. Full service brokers are more expensive because you're paying an expert a commission to answer your questions, help with your portfolio allocation, and execute trades for you. If you don't need this kind of guidance or expect this type of customer service, then you can surpass the full service brokerage for one that's less expensive.

Discount brokers execute trades at a discounted commission because they don't offer advice on your investments. Online brokers allow you to steer your account by entering trades yourself and managing your account online — you won't get any investment advice, but most have in-depth research tools and you'll pay a discounted trading fee.

Do all of your research and talk to family and friends to see if they use a company they'd recommend. Between their suggestions and the list you've come up with, you'll have plenty of details to compare and find the best one for your needs.

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mlen mlen 8 years
American Funds also has some low expense ratios. you can open IRAs at banks but your options can be even more limited there sometimes. like supercoolnat mentioned. T Rowe Price, Fidelity, and Vanguard are worth checking out if you are ok with only investing in one fund family. do some research into their different funds befor eyou commit to one. if you want to do stocks too you'd want to research e*trade and ameritrade and others to check out their fee structure. make sure you look for any low balance fees- i know some brokerages will charge you a quarterly fee if you don't hold a certain amount of assets in your accounts
supercoolnat supercoolnat 8 years
I use T Rowe Price for my IRA, as well as for a taxable mutual fund account. Like megln1022 said, you're limited to their family of funds. But I've found that the variety they have meets my needs. And the fact that they're no-load, with no brokerage fees, and relatively low expense ratios, that makes it a good deal for me. Other similar mutual fund families that you can open up accounts directly with are Fidelity and Vanguard.
SweetPeasMom SweetPeasMom 8 years
Our credit union offers IRAs based off of their mutual funds, but I guess if I want to choose stocks I'll go with another company. My grandfather recommended I use Ameritrade because they don't have annual fees. There's so much to think about!!
bellaressa bellaressa 8 years
Sorry, I just wanted to know the difference.
bellaressa bellaressa 8 years
Can you just buy an IRA from a bank?
mlen mlen 8 years
also it depends on what you want to buy. certain companies, mutual fund companies, allow you to open accounts there but you can only buy into their funds. if you want a wide range of investments you'll have to go to an online brokerage house or a brokerage firm.
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