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Brokerage recommendation

edited November 2011 in Fund Discussions
I want to open a brokerage account (and a Roth) for my daughter, who has just started investing her money from part time work
while studying in college. I have an account with WellsTrade, but I don't think it makes
sense for her, because the lower balance will trigger a lot of fees. I was thinking about
Schwaab because of a large selection of no-transaction-fee funds and availability of
a checking account if needed. Any opinions/experiences about Schwaab? Recommendations for other
brokers? Thanks.


  • edited November 2011
    Ameritrade has really good customer service (in my experience) and a fine selection of funds, as well as a decent amount of no commission fee ETFs.
  • rmt
    edited November 2011
    If you have a PMA Checking account,you can link your children's brokerage account with that PMA.They also will get 100 free trades.You need to add your children as joint account holders to the checking account.
  • Thanks, rmt. Wells Fargo has told me about that possibility. I just thought it may be cleaner to have a completely separate account for her. I am also not sure if linking accounts gives her access to my account. I need to find that out.
  • edited November 2011
    Try Fidelity. They do not charge fees for just having Roth account, a big Supermarket of NTF-funds (Fidelity and otherwise) and very usable set of NTF ETFs. For other ETFs, you only pay $7.95 per transaction.

    Plus Fidelity has a very usable web site for managing your account.

    NTF ETFs: Fidelity Nasdaq Composite Index Tracking ETF (ONEQ) plus the 30 ETFs in the following list which covers most asset classes you need to build a good portfolio.
  • edited November 2011
    The user and all related content has been deleted.
  • Recent changes affecting brokerages:
    1) Fidelity has reduced the period for which it charges a short term trading fee on NTF funds down to 60 days;
    2) Wells Fargo never required a minimum to get 100 free trades in WellsTrade, just that you link it to a PMA checking account. However, that checking account used to be free with $25K in combined balances (otherwise $25/mo). They now require $50K (or $25K in bank accounts not counting the brokerage balance) and the fee without waiver is up to $30.
    3) Scottrade has finally(!) added full cash management services via Scottade Bank.
    4) Schwab is shifting from $49.99 buy/sell for TF funds, to $76/$0 effective Dec 1.

    Schwab and Fidelity both have excellent service, both electronic and brick-and-mortar. WellsTrade (with PMA linkage) is cheap, and their service is ... , well, they're cheap to use.

    In terms of NTF and load waived funds, Schwab wins. They carry several load fund families with load waived. Federated and Victory comes to mind, but there are others. They recently changed their website, making it more difficult to browse funds.

    Fidelity is better for TF funds, which often have lower TCO (total cost of ownership), when one considers the typically lower expense ratios. While it does cost $75 to establish a position, additional purchases can be made for $5 (and $0 to sell), as opposed to $17 for Scottrade (they even charge to sell a load fund), $49.99 for TDAmeritrade, and possibly more for Schwab.

    For the stated needs, I'd be inclined to go with Schwab, though any of the brokerages mentioned will be at least adequate.
  • Thanks everyone. Looks like it is coming down to Fidelity vs. Schwaab. I will visit their local offices and make a decision. I agree with msf that WellsTrade service is not their strong point, to put it mildly. As my daughter is new to investing, higher level of service is beneficial.
  • edited November 2011
    Reply to @msf: Thanks for pointing to recent changes. I had missed the reduction in short term trading trading period at Fidelity to 60 days (from 180).
  • Reply to @Kaspa:
    Since you already hv a PMA relationship,only the checking a.c will be shared wih ur children. You can keep the absolute min in the checking a.c. Your child will only see their brokerage a/c by default.
  • Reply to @Investor:
    It is either fidelity's 60 days or the fund company's period whichever is greater. example, Royce is 180 days while for Mathews it is 90 days.
  • Hi Kaspa
    If your daughter just want to 'trade' you can get sogotrade, 3 bucks/trade, first 25 transanction is free.... but problem is you only can trade w/ ETFs or stocks

    Otherwise we use BOA, reasonable fees [free trade] if you have > 25K in the check + CDs/saving/ we have a few - sogotrade, BOA, schwab, they have excellence reviews for stocks/ETFs and you can do research there. You also may want to 'spread your eggs' into different basket just in case one of them go belly up

    zions bond for less is a very good place just to buy 'pure bonds'

    also look at thinkorswim probably another good brokerage.
  • edited November 2011
    Reply to @rmt: Actually depending on the short term holding period and the early redemption period of the fund, you can be subject to none, one or both fees.

    For example, you are selling $10,000 worth of shares and lets say fund early redemption period is 90 days and ER fee is 1%..

    If you sell in <= 60 days: You pay Fidelity $75 and you pay the fund $100.

    If you sell between 60 - 90 days, you don't pat Fidelity $75 but you pay the fund $100.

    If you sell after 90 days, you pay no fees.
  • Reply to @johnN: She will use mutual funds -- at least, that's my advice to her. She is not very knowledgeable about investing and the simplest thing for her is to find
    a good core fund like FPACX, PRPFX and invest a part of her earning every month. I saw that both of these funds have transaction fees at WellsTrade unless the account is linked to a PMA account. Both are NTF at Schwab and Ameritrade. FPACX is not NTF at Fidelity. My suggestion to her is not invest in stocks till she has at least two years of investing experience.
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