The proliferation of online activity has given way to unprecedented access to knowledge. Information is just a click away, and it’s made consumers addicted to peer reviews. Whether you’re looking for a place to eat or a trustworthy auto shop and everything in between, comparative reviews are easy to find and readily available.
However, trying to find reliable reviews of stockbrokers leaves something to be desired. You can get plenty of opinions from people when it comes to financial advisors and brokers, but how much is that information worth? What details are truly important and what separates a good broker from a bad one requires a bit more detail than what you get from your friends, family or local butcher.
Getting the Details Right
One of the most popular and well-respected sites for reviews of brokers is Finra’s BrokerCheck. Just input the name of the broker you’re interested in, or do a search by zip code to find a list of brokers near you. You can quickly find out essential data like whether or not they’re current on their licenses and what types of trades they deal in.
But it doesn’t help you compare their fees relative to other brokers or find brokers based on certain search criteria. Currently, there is no way to find brokers any other way than by name or location. In order to compare prices, consumers either need to shop for themselves by talking to prospective brokers, or consult a generic database that can help identify what’s considered appropriate and what isn’t.
If you’re looking for a discount online brokerage, you’re in luck. There are plenty of sites that help you compare fees, account capabilities, customer service ratings and other various components of the online brokerage business. Stockbrokers.com, for example, lays out each major online broker and allows you to compare each one so you can find your ideal setup.
For those looking for a more personal touch though, it’s difficult.
Other than verifying that a potential broker has all their licenses and registrations up to date, there are a number of other essential factors you’ll want to verify before committing your money. Fees are important of course, but how those fees are determined may reveal where their financial advice stems from. Fee-only advisors tend to be more open minded when it comes to investment selection whereas commission-driven advisors are given incentives to recommend certain products over others.
The Bottom Line
Online brokerages are getting more and more popular and part of the reason is simply because the information available is ubiquitous. Smaller brokers and independent financial advisors don’t come up on screens for brokers fees or available investment choices. It can be challenging to know what kind of deal you’re actually getting.
Fee-only advisors who don’t scoff at the idea of taking your call whenever you have a question and actively go out of their way to help you understand exactly how and why your portfolio is set up the way it is are arguably the best brokers out there. Without commissions you can be sure that their investment advice is putting your concerns first so you don’t have to wonder if they’re actually getting a bonus for putting you in something that might not be the best fit. Finally, long-term performance is the best determining factor of whether a broker is good or not. If a broker demonstrates a record of solid investment decisions regardless of the state of the market, that can be worth far more than the savings earned from picking the broker with the lowest fees. Although, that’s a rare find because most active managers underperform the overall market on a risk-adjusted basis, net of fees.