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You can search for brokers through the Investment Advisor Public Disclosure's (IAPD) website. Make sure to read the brokers' ADV form, which contains information about the broker's business practices, conflicts of interests, and fees. Use BrokerCheck to research a broker's professional background and qualifications. Choose brokers that belong to reputable governing bodies such as the National Association of Securities Dealers and the Financial Industry Regulatory Authority (FINRA). Regular brokers work directly with their clients, while broker-sellers act like a middleman between a brokerage firm and the client. Typically, regular brokers are more reputable than broker-sellers. Broker-sellers may have hidden fees that can prevent you from making the most out of your investment. Because a broker-seller's services can be cheaper than the services provided by a regular broker, some people may choose a broker-seller over a regular broker. Because discount brokers do not offer as many services as full service brokers, they are typically cheaper. However, choose a discount broker that offers their investors free advice on investments. Unlike full service brokers, discount brokers typically do not provide their clients with research and advice, personal consultations, or tax and estate planning. The cost of a discount broker can range from $0 to $6 USD per trade. Full service brokers provide many services that may be beneficial to a beginner investor, such as help managing your account, offering one-on-one advice, and providing you with research to help you make a sound investment. These services may be worth the money if you are a new investor. The cost of a full service broker can range from $5 to $20 USD per trade. Brokers typically make a $5 to $10 USD commission off of every trade that you make. If you plan to actively trade your stocks, then choose a broker with a low commission fee. If you choose a broker with a high commission fee, half of the money you make may go to your broker instead of you. Because buy-and-hold investors do not do a lot of trading, your account may be inactive the majority of the time. Choose a broker that does not charge for inactivity or monthly fees. Since you are interested in long-term gains, it is ok to have a broker with a slightly higher trade commission fee. Most brokers, but not all, typically require a minimum balance of $500 to $1,000 USD or more to open an account. However, fee structures that seem complicated typically contain hidden fees. Read the fee summaries and account agreement carefully before you make a decision, especially if the broker's rates seem too good to be true. Make sure to read over the broker's withdrawal guidelines and fees as well. Some online brokers do not require a minimum deposit.
Research different brokerage companies. Choose regular brokers over broker-sellers. Use a discount broker if you are a young investor. Pay for a full service broker if you have the funds. Find a broker with a low commission fee if you are a trader. Avoid brokers who have inactivity fees if you are a buy-and-hold investor. Select a broker with a straightforward fee structure.