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3 Things First-Time Investors Should Consider When Choosing A Broker

I’ve got at least 25 investing apps downloaded on my phone, which, as I write this, seems a bit excessive. It’s definitely not helping my phone’s dwindling storage, especially considering I only actively use about six of these apps. But in my defense, it’s part of my job.

As an editor at Finder, I regularly test and review investing platforms. I sign up, deposit money and place trades. I explore the available features and options and judge the timeliness and level of support I receive from customer service. My goal is to expose the perks and pain points of different brokers so readers can spend less time doing it themselves. And as a result, I’ve wound up with lots of accounts over time, some of which I’ve adopted into my regular investing strategy.

I’ve reviewed many brokers over the years, and the truth is, no two are the same — nor is every broker a good option for beginners. With all the options available, how do you know which broker is right for you?

Here are three things first-time investors should consider when choosing a broker.

1. Quality User Experience Is A Game-changer When It Comes To Investing

Investing can be intimidating, confusing and overwhelming, and lots of people avoid it because they don’t know how to start. A platform that further complicates the process with a clunky, outdated and unintuitive user interface does no good for beginners. But investing doesn’t need to be stressful.

When I talk about investing with friends, family, colleagues and strangers, most simply want a platform that makes it easy to participate in the markets. No overthinking, no guesswork. Just a straightforward, uncomplicated platform that lets them buy and sell stocks. While big brokers have dominated the space for decades, in my experience, newcomer brokers do this best.

Brokers that have come to market in the past decade or so — the Robinhoods and SoFis of the bunch - place a strong emphasis on user experience, which, on top of introducing zero-commission trading to the mix, has helped to democratize investing. Modern investing platforms are simpler, and they’ve given more people the confidence to invest. The number of retail investors using mobile trading apps has steadily increased, growing from 28.9 million in 2016 to 137.1 million in 2021, according to Business of Apps.

While beginners can undoubtedly find their way around big broker platforms, these intuitive, mobile-first trading platforms provide an unmatched experience when it comes to effortless investing. If you’re a beginner just getting started, a stock trading app is a no-brainer.

2. Be Aware Of Back-End Fees

While stock commissions are largely a thing of the past, trading fees are not the only costs associated with investing. The first time I got hit with a mandatory reorganization fee — a $38 fee TD Ameritrade charged to my account because a stock I held went through a reverse split — I was taken aback. I didn’t know what the fee was for, and it sent my cash balance into the negative and me scrambling to deposit money to bring my account back into good standing. I could hold a share for $10 and get hit with a $38 reverse stock split fee. It didn’t sit well with me.

When researching brokers, find the broker’s fee schedule and familiarize yourself with the overall costs of doing business with that particular platform. The fee schedule outlines all the costs and miscellaneous fees associated with an account. These can include account maintenance fees, paper statement fees, inactivity fees, wire transfer fees and more. The best brokerage accounts tend to charge the fewest fees, and they’re always transparent about the fees they do charge.

3. There's Nothing Wrong With Having An Account With More Than One Broker

I actively use six brokers for all my trading and investing, and it’s because there are certain aspects of each that I enjoy. Really, it’s because no single broker offers everything I’m looking for.

For instance, TD Ameritrade has been my primary broker for about seven years, because I value its level of free research tools and love its Thinkorswim trading platform. But it doesn’t offer fractional share trading, and I like the idea of being able to invest in specific dollar amounts. Plus, TD’s mobile trading platform could use a makeover. So I opened an account with Robinhood, which lets you invest with as little as $1. Robinhood’s mobile platform is also second-to-none when it comes to intuitiveness and user-friendliness. It makes investing engaging.

Meanwhile, I have an account with SoFi, which offers financial planning and advice to its members at no additional cost. I use Public for Treasury Bill investing and Charles Schwab for a SEP IRA. I might do my research on TD Ameritrade, where I can access its robust lineup of tools, and then invest on Robinhood. The point is, there’s nothing wrong with having multiple brokerage accounts if you can’t find one that offers everything you want.

Bottom Line

We review nearly two dozen brokers at Finder, so I’m no stranger to the overwhelming number of choices when it comes to choosing a broker. If you’re just getting started investing, look for a platform with low fees and an uncomplicated investing experience. And don’t be afraid to try different brokers out to find the platforms that work best for you.

About the Author

Matt Miczulski is an investments editor at Finder. With over 450 bylines, Matt dissects and reviews brokers and investing platforms to expose perks and pain points, explores investment products and concepts and covers market news, making investing more accessible and helping readers to make informed financial decisions.

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