Choosing a broker is a big step, whether you’re a new investor who wants to open your first account or a more experienced investor who wants to establish a new professional relationship. As you consider your alternatives, you’ll be focusing on two main goals: Identifying a brokerage firm that offers the services you want and finding an individual broker with whom you’re comfortable working.
Brokerage firms, also known as broker-dealers, come
in three sizes:
National firms with branch offices across the country
Regional firms with branch offices in a number of states within one area of the country
Local firms, which may have a single office or a number of branches within a city, a group of counties, or a state
All brokerage firm branches handle basic securities transactions, including buying and selling stocks and bonds on your behalf. Most offer individual retirement accounts (IRAs),
college savings plans, mutual funds,
and annuities.
Some firms also execute orders for other investment products, such as options contracts, or serve as introducing brokers if you wish to trade futures contracts.
If you want to buy and sell securities, you generally must handle those transactions through a licensed broker-dealer. There are a few exceptions, such as reinvesting stock dividends through a company-sponsored reinvestment program or buying your employer’s stock through an employee stock purchase plan. But the vast majority of transactions involve a broker.
