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What You Should Know About Pocket Listings
- Market Trends
- Home Improvement
- First Person
- Unique Homes
- Tips & Advice
How Much Does It Cost to Move?
By Mary Boone on 23 Mar 2020
The dollars and cents that go into moving vary greatly depending on a number of factors.
Over the past year or so, “pocket listings” have become a more mainstream option for quietly marketing a home. If you haven’t heard this real estate term before, you probably will. Here is what today’s homebuyers and sellers need to know about pocket listings.
A pocket listing is an unofficial, off-market listing
Also known as a “quiet” or “off-market” listing, a pocket listing is a property that an agent keeps tucked away in his or her “pocket.” Though the seller has a signed listing agreement with a real estate agent, the property for sale isn’t officially listed in the MLS. Other traditional forms of marketing may be downplayed, too.
Pocket listings started many years ago as a way for high-profile people or expensive homes to be quietly marketed. They were seen as exclusive because they were listed under the radar of mainstream agents, buyers and even the press.
Pocket listings are growing in popularity
As the real estate market has become more challenging, pocket listings have become more mainstream.
In many markets, there are few good properties and low inventories, coupled with buyers who are motivated to see more homes. You’d think that would be a perfect reason to push homes on to the market.
And yet, there are sellers who have been interested in selling but aren’t comfortable with current home values. These sellers may sit on the sidelines and will only sell if they can get the price they want.
As soon as a home is listed in the MLS, the infamous “days on market” clock starts ticking. The longer your home sits on the market, the more “stale” it becomes and the less money you’re likely to be offered. Buyers, seeing that a home has been for sale for 30 or 60 days or even longer, will inevitably make low-ball offers. And so, instead of going on the market, a seller who wants a certain price may engage their real estate agent and put the listing out there as a “pocket” listing.
Pocket listings let sellers test the market
With a pocket listing, a seller and their agent can quietly test the market without adding it to the MLS. They can gauge reaction to the price they’re asking and see what kind of traffic they get and how the market receives the property without the MLS clock ticking.
The agent can get the word out about the home using various marketing methods except the MLS — maybe even holding a small open house, doing a private broker’s tour, and stimulating word of mouth with other agents.
Sometimes, pocket listings eventually get entered into the MLS. But in other cases they’re sold without ever making it into the database.
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Pocket listings have become a secondary home market
In some markets, there are entire websites devoted to pocket listings or networking opportunities with other agents about upcoming listings and properties. What started as a way to get the word out about future listings has turned into a secondary market of homes for sale for well-connected real estate agents.
While sellers may agree to a pocket listing and dictate how the information about their home is disseminated, many boards of Realtors have procedures and rules for how listings are to be input into the local MLS. Those rules include fines for agents who don’t input their listing within a certain time period.
Time will tell if pocket listings are here to stay or just a direct result of our current real estate market.
What pocket listings mean for sellers and buyers
If you’re a seller, you should consider testing the waters with a pocket listing, even if it’s just for a week or two. You’ve got nothing to lose.
For buyers, it’s important to work with a local agent who has established relationships with other agents in the community. That way, you can be certain that you’ll be made aware of all potential homes for sale.
Brendon DeSimone is a Realtor® and real estate expert based in San Francisco and New York. He is a contributor to Zillow Blog, has collaborated on multiple real estate books and is often quoted by major media outlets. Follow Brendon on Twitter.
Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.
The Complete Guide to Choosing an Online Stock Broker
Fees, platform features and security are some key considerations
Profitable investing requires you use a brokerage service that aligns with your investing goals, educational needs and learning style. Especially for new investors, selecting the best online stock broker that fits your needs can mean the difference between an exciting new income stream and frustrating disappointment.
While there’s no sure-fire way to guarantee investment returns, there is a way to set yourself up for success by selecting the online brokerage that best suits your needs. In this guide, we’ll break down everything you should look for in your ideal brokerage, from the obvious (like whether or not the platform allows you to trade the securities you’re interested in) to the not-so-obvious (like how easy it is to get support from an actual human when you need it).
- Access to the financial markets is easy and inexpensive thanks to a variety of discount brokers that operate through online platforms.
- Different online brokers are optimized for a different type of client—from long-term buy-and-hold novices to active and sophisticated day traders.
- Choosing the right online broker requires some due diligence to get the most for your money. Follow the steps and advice in this article to choose right.
Step 1: Know Your Needs
Before you start clicking on brokerage ads, take a moment to hone in on what’s most important to you in a trading platform. The answer will be slightly different depending on your investment goals and where you are in the investment learning curve.
If you’re just starting out, you may prioritize features like basic educational resources, comprehensive glossaries, easy access to support staff, and the ability to place practice trades before you start playing with real money.
If you have some investment experience already under your belt, but you’re looking to get serious, you may want more high-level education and opinion-based resources authored by professional investors and analysts, as well as a good selection of fundamental and technical data.
A truly experienced investor, perhaps someone that’s executed hundreds of trades already but is looking for a new brokerage, is going to prioritize advanced charting capabilities, conditional order options and the ability to trade derivatives, mutual funds, commodities, and fixed-income securities, as well as stocks.
Be honest with yourself about where you are right now in your investing journey and where you want to go. Are you looking to establish a retirement fund and focus on passive investments that will generate tax-free income in an IRA or 401(k)? Do you want to try your hand at day-trading but don’t know where to start? Do you like the idea of tweaking and tailoring your own portfolio, or are you willing to pay a professional to ensure it’s done right?
Depending on which path you want to follow, there may be many more questions you’ll need to answer along the way as you gain experience and refine your goals. For now, however, start with these four crucial considerations to help you determine which of the brokerage features we discuss below will be most important to you. To help get those analytical juices flowing, we’ve included several sample questions under each broader topic:
- Generally speaking, are you an active or passive investor? Do you want to be super hands-on and execute day- or swing-trades? Do you see yourself eventually leaving the 9-to-5 grind and becoming a full-time investor? Or, instead, do you want to find a few solid investments to hold for the long haul with little or no day-to-day interaction?
- How much do you already know? What kind of trades will you want to execute? Are you going to be the type of investor that knows what they want to do and just needs a platform that makes it easy and quick to execute trades, or do you want a broker with a broader range of resources to help you identify opportunities? What kind of securities are you focused on? Stocks, mutual funds, ETFs? If you are more advanced, do you also want to trade options, futures, and fixed-income securities? What about margin trading? Do you need access to conditional orders, extended-hours trading, and automated trading options?
- Do you want help? What kind? Do you want to go the DIY route, learn how to interpret charts and financial data to find and execute your own trades, or would you prefer to hire a pro? If you want to do it yourself, where are you on the learning curve? What sort of resources will you need to further your knowledge? Will you need easy access to support personnel, or are you able to learn what you need to know through online educational resources? Are you happy to execute trades online, or will you want to call in to have a broker assist you with the process?
- What are your goals? What are you investing for? Why are you choosing to invest? Are you trying to supplement your regular income to improve your current standard of living? Is there a specific event or expense you want to fund? Do you intend for this to eventually become your primary income source? Are you trying to build up retirement savings and, if so, do you already have a retirement account or will you want to open a new one with your chosen brokerage?
There are no wrong answers to these questions. Be honest with yourself about how much time, energy and effort you’re willing and able to put into your investments. Your answers may change over time, and that’s ok. Don’t try to anticipate all your needs and goals for the rest of your life. Just start with where you are right now.
Step 2: Narrow the Field
Now that you have a clear idea of what your investment goals are and what basic services you’ll look for in your ideal brokerage, it’s time to whittle down your options a bit. While there are certain brokerage features that will be more important for some investors than for others, there are a few things any reputable online brokerage should have. With such a wide range of available options, checking on these basic necessities is a great way to narrow the field quickly.
Stock Broker Regulation and Trust
Is the brokerage a member of the Securities Investor Protection Corporation (SIPC)? There will typically be some kind of notation or disclaimer at the bottom of the home page. You can quickly look up the brokerage on the SIPC website.
Is the brokerage a member of the Financial Industry Regulatory Authority (FINRA)? This should also be very clearly noted in an easy-to-find location. You can look up brokerages on FINRA’s BrokerCheck website.
If the brokerage offers checking or savings accounts, or any other deposit products, are they covered by the Federal Deposit Insurance Corporation (FDIC)? Investment products – such as brokerage or retirement accounts that invest in stocks, bonds, options, and annuities – are not FDIC insured, because the value of investments cannot be guaranteed. If the brokerage offers CDs, Money Market Deposit Accounts (MMDAs), checking, or savings accounts, however, they should be fully backed by the FDIC.
What kind of insurance do they provide to protect you in case the company fails? As a member of the SIPC, the company should have insurance with a per-customer limit of at least $500,000, with $250,000 available for cash claims. If the company adheres to the Customer Protection Rule, it should also provide additional coverage above and beyond the basic requirements of the SIPC.
Is there any kind of guarantee of protection against fraud? Will the company reimburse you for losses resulting from fraud? Make sure you double check what the brokerage requires of you in order for you to be reimbursed. Find out if you have to provide any documentation or take specific precautions to protect yourself.
What are current customers saying? Try searching online for consumer reviews of the brokerage, using keywords like “insurance claim,” “fraud protection” and “customer service.” Of course, online reviews should typically be taken with a grain of salt – some people just like to complain. However, if there are several users from different sites all lodging the same complaint then you may want to investigate further.
Online Security and Account Protection
It’s important to know how well a brokerage helps you protect your information.
Does the brokerage website offer two-factor authentication? Do you have the option of activating a security feature in addition to your password? Common options can include answering security questions, receiving unique, time-sensitive codes via text or email, or using a physical security key that slots into your USB port.
What kind of technology does the broker use to keep your account safe? Find out if the broker uses encryption or “cookies,” and if it clearly explains how it uses them to protect your account information and how they work.
Does the company ever sell customer information to third-parties, like advertisers? The answer should definitely be no.
Brokerage Account Offerings
Since the types of tools you need will depend on your goals, you should also do a quick check for the following items to weed out brokerages that simply won’t meet your needs.
What kinds of accounts does the broker offer besides standard (taxable) investment accounts? For example, if you have dependents, find out if you can open an Education Savings Account (ESA) or a custodial account for your child or other dependents.
Can you open a retirement account? Look into whether the broker offers Roth or traditional retirement accounts and if you can roll over an existing 401K or IRA.
Are there different products for different investing goals? For example, find out if the broker offers managed accounts. Also, find out if there investment minimums for different types of accounts.
Can you manage retirement accounts for employees through the brokerage? This may apply if you’re a small business owner. These types of accounts include SIMPLE or SEP IRAs.
Does the brokerage offer Self-Directed IRAs or Solo 401K options? This applies if the only employee in your small business is you.
Step 3: Figure Out the Fees
While there may be other things that matter more to you than fees, you should start out with a pretty clear idea of how much you’ll pay to use any particular brokerage.
For some, a small premium may be justifiable if the platform offers features that its cheaper competitors lack. In general, however, you want to lose as little of your investment returns as possible to accounting fees and trading commissions.
By starting with the bottom line, you can easily determine which stock brokers are too pricey to consider and which simply aren’t compatible with the type of investment activity you’re focused on.
Broker Account Fees
Does the broker charge a fee for opening an account?
Is there a deposit minimum? Bear in mind that mutual funds often have investment minimums of $1,000 or more, but that’s not the same as a brokerage requiring that you deposit a minimum amount of cash just to open an account.
Are there any annual or monthly account maintenance fees? If so, are they waived for larger accounts or is there an easy way to avoid them even if your account balance is small? For example, Vanguard waives its annual fee if account holders agree to receive documents electronically.
Does the broker offer access to a trading platform as part of their free membership? If you’re just starting out, the free platform may suit your needs perfectly.
Is there a Pro or Advanced trading platform that is pay-to-play? If you’re a more advanced investor, it’s important to know whether or not you’ll need to pay to upgrade your account to access tools and resources that are up to your speed. Some advanced platforms are free for customers who agree to place a minimum number of trades per year or invest a minimum amount.
What are the margin rates? Margin trading is only for very experienced investors who understand the risks involved. If you’re a new investor, this point won’t apply to you.
What’s the minimum loan amount and account balance? Most brokerages will offer lower interest rates for larger amounts, but don’t let that be the reason you borrow more than you should.
Do trading commissions depend on how much you have invested through the brokerage or how often you trade? For example, Vanguard’s trading commissions vary depending on account size, while E*TRADE offers a reduced commission to customers who trade more than 30 times per quarter.
Commissions at Charles Schwab are lower than competitors, but you must deposit at least $1,000 to open an account. Make sure you look at the prices that will most likely apply to you based on your anticipated account balance and trading activity.
Phone or Online
Phone or Online
Are there different commission rates for different securities? If you plan on trading more than stocks, make sure you know what the fees are to trade options, bonds, futures, or other securities.
If you’re interested in mutual funds or ETFs, are there fee-free options? What is the minimum investment? Make sure that mutual funds that allow you to buy and sell for free (often called No Transaction Fee, or NTF, funds) don’t charge other types of fees instead. Mutual funds often come with a number of different kinds of expenses, some of which can sneak up on you. Make sure you review the prospectus of any fund you’re considering to ensure you understand all the costs involved.
Does the brokerage offer any free or reduced-price trades? The number of ‘bonus’ trades you receive may depend on your account balance, so make sure you check on what’s offered for the account level that would apply to you. Also be sure to check on what kinds of trades qualify for the discount—if it’s just for stocks and if ETFs, options, or fixed-income securities count.
Is the commission schedule conducive to the kind of trading you’d be doing? Are you rewarded or penalized for more active trading? For example, Vanguard’s commission rates increases after the first 25 trades for Standard and Flagship customers, or after the first 100 trades for Flagship Select customers, as you can see in the chart above. This means that customers that focus on passive, buy-and-hold investing reap the most benefit.
Conversely, E*TRADE offers reduced commissions after the first 30 trades in any given quarter, so active traders are rewarded for using the platform more often.
If the broker offers advisory services, how much do they cost? Is there a minimum account balance required to qualify for those services? If you’re not looking to manage your own portfolio for whatever reason, make sure you pay attention to advisor fees very closely.
Step 4: Test the Broker’s Platform
While any brokerage should have a pretty decent description of what kinds of tools and resources their trading platform offers, sometimes the best way to assess platform quality is to give it a test drive. For brokers that allow you to open an account for free, it may even be worth the effort to go through the signup process just to access the trading platform if that’s what’s necessary.
Whether the brokerage has a web-based platform that anyone can access or a free downloadable platform that requires no-strings signup, do what you can to access the tools you’d actually use for free.
Even if you’re a more advanced trader, and there’s no free way to play around with “Pro” tools, you can get a good idea of the quality of a brokerage’s offerings just by looking at its basic suite. If there’s nothing in the standard platform that seems promising, it’s unlikely the advanced platform will be worth your time either.
On the other hand, some companies offer a huge array of tools and resources with their free products, so don’t write off brokerages with only one platform just yet.
We’ve already spent a good amount of time narrowing down your choices based on price and basic account offerings. Now that we’ve finally gotten to the fun stuff, make sure you spend time looking at the features available in multiple areas.
Go through the motions of placing a trade to see how smoothly the process operates. Pull up multiple quotes for stocks and other securities, and click on every tab to see what kind of data the platform provides. You should also check out any available screeners or other tools provided to help you find investments that meet specific criteria.
Questions to Answer While Testing Platforms
What types of securities can you trade on the platform? You should already have ruled out any platforms that don’t allow you to trade the securities you’re interested in. Make sure this platform automatically allow you to trade preferred shares, IPOs, options, futures, or fixed-income securities. If you don’t see particular security on the platform, but you know that the brokerage supports it, try looking in your account settings, or doing a quick search, to see how you can activate those features and learn about permission requirements.
Are quotes in real-time? Are they streaming? There will be multiple ways you can pull up a price quote for a given security, but not all of them will provide the most up-to-date data. Make sure you are aware of where you can find real-time streaming information to ensure your trades are well-timed. Vanguard’s web-based platform, for example, provides real-time data in its Ticker Profile pages, but it requires manual refreshing. Simple quote-level data is delayed by 20 minutes or more. Schwab’s online quotes also require manual refreshing, but the downloadable StreetSmart Edge platform and its cloud-based counterpart both offer real-time streaming data.
Can you set up customized watchlists and alerts? If you’re going to be a more active trader, you’ll likely want to be able to receive alert notifications via text, in addition to email, and set up multiple watchlists based on different criteria.
Does the platform provide screeners that you can customize to find stocks, ETFs, mutual funds, or other securities that meet your specific criteria? Even if you’re brand new and have no idea what any of the options actually mean, play around with the various parameters to get an idea of how easy the tools are to use. A good platform will be intuitively organized and easy to operate.
What kinds of orders can you place? Go through the motions of placing a trade and take a look at what types of orders are offered. A basic platform should offer at least market, limit, stop, and stop limit. A better platform will also allow you to place trailing stop orders, or market-on-close orders (which execute at the price the security reaches at market closing).
If you’re looking to make relatively few trades, and you’re not interested in day- or swing-trading, a basic selection of order types should be fine. If you’re looking to get into the nitty-gritty of stock trading, however, you should look for a wider selection. If you’re more advanced, you should look for the ability to place conditional orders that allow you to set up multiple trades with specific triggers that will execute automatically when your specified conditions are met.
Do you have control over order timing and execution of trades? A basic platform should at least allow you to place trades that are good-for-day (meaning they can be executed at any time during trading hours) or good-until-canceled (which keeps the order for up to 60 days until it is executed or you cancel it).
A more advanced platform will allow you to place limit orders with some more variability, such as fill-or-kill (which automatically cancels the order if it is not entirely filled immediately) or Immediate or cancel (which automatically cancels the order if it isn’t at least partially filled right away).
Can you trade in Extended Hours? Stock and ETF trades take place outside of normal market hours of 9:30 a.m. – 4 p.m. EST, the in pre-market and after-hours periods. Each brokerage has its own definition of the specific time periods these Extended Hours sessions occupy. For example, Schwab has Pre-Market trading beginning at 8 a.m., while E*TRADE’s Pre-Market session begins at 7 a.m.
Not all platforms allow you to trade during extended hours, and some only allow trading during after hours, but not during pre-market hours. You may be charged a fee for extended hours trading, so make sure you review the terms of those trades to make sure you aren’t caught unawares.
Again, for new investors, this feature may not be too important. For more advanced traders or those who are looking to be very active, however, reviewing a brokerage’s extended hours trading policy is crucial.
Now that you’ve played around with the platform a bit, take a look at the charting capabilities to explore the tools at your disposal. Pay attention to what kinds of data you can plot, how easy it is to switch between charting technical studies and reviewing fundamental or market data, and what you can customize and save for later reference.
What technical indicators are available on the chart? In general, the more the better. At the very least, you should be able to plot basic indicators like volume, RSI, simple moving averages, Bollinger bands, MACD, and stochastics. If any of these basic indicators are missing, it’s time to move on. You should also be able to plot at least a few company events, like earnings reports, stock splits, and dividend payments.
What follows is examples of two different technical menus. This one is a less-than-ideal option. Notice there is no way to plot volume:
This one has an amazing technical selection, which includes multiple options for each indicator type. It also allows you to plot fundamental data and has a search function:
Can you compare different stocks and indices on the same chart?
Can you draw on the chart to create trend lines, free-form diagrams, Fibonacci circles, and arcs, or other mark-ups?
Does the platform have a trading journal or other means of saving your work? Whether you’re learning how to read charts or are a professional trader who takes notes to keep yourself on track, having a way to customize and store your charts is a hugely useful tool. Related questions include:
- In addition to creating trend lines, are you able to draw on the chart simply to highlight important events so you can remember what to review later?
- Can you save your charts after you’ve customized them?
- Can you make notes for later reference?
- Can those notes be placed on the chart to make sure you know what they apply to when you look at it later?
Remember that some of these options may only be available on a Pro or Advanced platform. If you’re an advanced active trader, you’ll likely want a broker that offers all of these options. If you’re a more passive trader, or you’re just not looking to pay a premium for bells and whistles you’re not ready for, sticking to a free basic platform is just fine.
- Can you automate trades through customized rules or imported algorithms?
- Can the platform be customized to recognize specific chart patterns for prices, indicators, and oscillators?
- Can you set up alerts to notify you when the platform finds a matching pattern?
Does the website or platform allow paper trading? Paper trading is a way for investors to practice placing and executing trades without actually using money. It’s a great way for aspiring active investors to practice and for investors of all experience levels to test out new strategies and hone their skills without risking losses.
Does the platform allow backtesting? Another way to test out strategies and get comfortable with the process before putting cash on the line, backtesting allows you to simulate a trade based on the historical performance of your chosen security. It’s a way of placing a hypothetical, retroactive trade and then seeing what would have happened had you executed it in real life.
Step 5: How Well Does the Stock Broker Educate Its Clients?
While a useful and useable trading platform is crucial, you should also take the time to peruse the brokerage’s educational offerings and try out the search function.
If you’re a new investor, you need to be able to search for terms you don’t know or find advice on how to interpret data. If there’s a topic you’ve been wondering about or a metric you don’t completely understand, do a trial run using the search function and see if you can find the information you need quickly and efficiently.
Remember, what’s intuitive and user-friendly for one investor may be a nightmarish maze of fruitless search queries for another, so it’s important to find a platform that you can work with.
Once you’ve spent 20 minutes or so cruising a platform, you should be able to answer the following questions pretty easily. If you can’t, and a quick search of the site for specific answers doesn’t yield the necessary information, it’s likely a sign that the brokerage’s platform is not for you.
Stock Broker’s Quality and Usability
All the educational resources in the world are useless if you can’t access them easily. A good platform or website should provide a wide range of educational offerings, in multiple mediums, to make sure customers are able to quickly and easily find the information they need in a format that works for their learning style. Before we dive into the specific types of educational resources you should expect from a good brokerage, let’s first make sure those resources are user-friendly.
What types of educational offerings does the broker provide? Whether it offers videos, podcasts, user forums, or written articles, the format needs to work for you.
Where does the information come from? If the broker syndicates work from other sites, make sure those sites are reputable. If the site has a blog or other contributor content, then make sure the contributing authors have experience and authority you can trust.
How easy and intuitive is the site or platform to navigate? Make sure getting from a research page to the trading screen is a simple process. You don’t want to feel like you’re clicking in circles. Make sure different topics are easy to locate on the site.
Does the broker offer resources for beginners? These can include glossaries or how-to articles, fundamental analysis, portfolio diversification, how to interpret technical studies, and other beginner topics.
How effective is the platform’s search function? You can figure this out by typing in a common investing term or searching for topics you have questions about. How quickly was the search function able to retrieve the information you needed? Was this information immediately visible, or did you have to click through a few pages to get to it?
Here’s an example of a search function that’s not user-friendly:
While Vanguard does allow you to plot the relative strength index (RSI) with its charting tool, its search tool doesn’t seem to recognize the term.
Is there ample analysis for each security? This should include analyst ratings from multiple sources, real-time news items, and applicable market and sector data.
Is there sufficient fundamental data available? Stock profiles, for example, should include historical data for the issuing company, like earnings reports, financial statements (like cash flow, income statements, and balance sheets), dividend payments, stock splits or buybacks, and SEC filings. There should also be information about any insider trading activity.
Is there market data for the U.S. and foreign markets? What about industry and sector data? How deeply are you able to dive into the big-picture conditions surrounding market performance?
Step 6: Ease of Depositing and Withdrawing Funds
Especially if you’re investing to supplement your regular income, it’s important to know how easy it is to move money in and out of your brokerage account. If you’re looking to employ a more set-it-and-forget-it strategy, being able to withdraw funds may not be as big of a concern. Still, life often throws us things we don’t expect, so it’s prudent to review the deposit, withdrawal, and funds settlement terms of any brokerage you consider.
How can you deposit money into your brokerage account? Find out if you can deposit funds via check, ACH transfer, wire or credit card (this isn’t necessarily recommended, but it may still be an option).
Make sure you verify whether or not there are any fees associated with these options – though most brokerages don’t charge for deposits.
How long does it take for deposited funds to settle? If you’ve spotted an amazing trade entry but you don’t have enough cash in your account to execute it, settling times will suddenly become very important. Verify how many days it takes for deposited funds to be available for investment.
Settlement times may vary depending on the source of the deposit. Note that you may see longer settlement times if you maintain a low balance or don’t trade very often.
Does the brokerage offer regular checking or savings accounts that can facilitate swifter transfers? Are they free? Are they FDIC insured? If so, it might be easier to leave funds in a linked banking account so that they can be moved more quickly to your brokerage account if and when you need to bulk up your investment account.
How long does it take funds from the sale of your investments to settle? Make sure you check on settlement times for the different types of securities you will be trading.
What about dividend or interest distributions? How quickly are those funds available for investment? For withdrawal?
How easy is it to withdraw funds from your brokerage account? Find out if you can withdraw via ACH transfer, wire or check and how long it will take for those funds to reach your bank account. Also, check to find out if there’s a fee for withdrawal.
Does the brokerage offer the option of a debit or ATM card attached to your account? Sometimes this is offered for a brokerage account, and other times you need to open a linked checking or savings account to access this option. If you do have the option of a card, find out which ATMs can you use and if there are any fees associated with card use.
Step 7: Customer Service
By now, you’ve likely narrowed your options to one or two brokerages that really blow you away in terms of resources, features, and usability. Whether you’ve found your perfect platform or you’re still on the fence, take just a few more minutes to peruse the Help section of the brokerages you’re considering.
If you’re a new investor and you’re feeling overwhelmed, make sure you can get in touch with service staff quickly and easily. If you’re technically challenged, make sure the tech support team is easy to contact and available round the clock.
While these items won’t make or break your brokerage decision, it’s still important to ensure you understand how to get help when and if you need it.
- Is there a dedicated number you can call to speak a human for trade assistance?
- Make sure you are aware of any additional fees for call-assisted trades.
- Is there an automated number you can call for basic queries?
- What about general help? What are the call-in hours for representative assistance?
- What are the hours of operation for phone lines? Can you call 24/7, or are the phones only staffed during normal business hours?
- For those who are interaction averse, is there an email address you can use to receive prompt assistance?
- Does the brokerage use a secure internal messaging system for important documents and account queries?
- Does the website have an online chat option for immediate assistance?
- What if you have a basic question but don’t want to bug a representative? Is there a searchable FAQ section that answers a wide range of questions?
- What about tech support? Are there dedicated phone lines, email addresses, or chat systems for accessing technical assistance?
Step 8: Get Going and Next Steps
We know it can be tempting to just sign up for whichever brokerage has the most aggressive ad campaign, but successful investing requires attention to detail long before you place your first trade.
If you’re looking to make trading a long-term hobby, a future career, or just a means of bulking up your retirement fund, then it’s important that you use the tools and resources that will set you up for a successful and enjoyable experience.
By following this in-depth guide, you’ve hopefully found the platform that will best serve your needs, whatever they might be. You can find help sorting through the different brokers on our stock broker reviews page.
Once you’ve singled out your best brokerage, it’s time to get started. Don’t just set up an account and move on to the next thing. Really dive in. Use the educational and research resources available to you, start outlining your investment strategy, and make the most of all the tools at your disposal. You’ve spent valuable time identifying which features matter most to you—now it’s time to put them to work.
What Does a Stockbroker Do and How Do You Become One?
Are Human Stockbrokers Even Necessary Anymore?
You won’t find physical stores on every corner that sells stocks, and the average person can’t buy stocks by handing money to a cashier.
Stocks are bought and sold through stock markets such as the New York Stock Exchange and NASDAQ. For the average person to buy stocks through these exchanges, they usually need a middleman to execute the trade. This middleman is called a stockbroker.
While it hasn’t always been the case, the actual execution of stock trades for individual investors is most often carried out electronically by a discount brokerage firm, such as Fidelity, TD Ameritrade, E-Trade, or Charles Schwab. But human brokers still handle many trades, especially those for large institutional investors.
Stockbrokers are well-versed in the markets and can offer advice on the best times to buy and sell. It is their job to find clients the best prices possible. In exchange for executing the trade and offering advice, a stockbroker gets a commission in the form of a flat fee or percentage of the value of the transaction.
In the age of online trading, there is less demand for human stockbrokers. But there are still many instances in which an investor wants to work directly with a broker to execute a stock trade. For example, they may want to ensure the sale is executed at a specific price, or have multiple transactions they’d like executed in a specific order.
The job of a stockbroker is challenging and can be lucrative, but it’s not without its challenges. Here are some of the pros and cons of becoming a stockbroker:
Great career option for people who have in-depth knowledge of the stock market
Offers high commission-based income potential
Good fit for ambitious individuals with strong selling skills
Must be able to handle rejection
Extremely competitive work environment
May require excessively long work hours
May have difficulty building a significant client base due to availability of online trading
Becoming a Stockbroker
While there are no specific educational requirements for becoming a stockbroker, certain degrees or coursework can give you an advantage in the job.
Education: You might want to consider an undergraduate degree in business. Many stockbrokers also have a master’s in Business Administration (MBA) or a masters in finance. It also helps if you have some education in mathematics, statistics, and quantitative analysis.
Experience: Stockbrokers often start working for a brokerage firm or bank in a different role (many begin as college interns), and then gain on-the-job experience. To become a broker, they must show a deep understanding of financial markets, regulations, and accounting practices.
Exams: Brokers should also pass the General Securities Representative Exam, commonly known as the Series 7 exam, administered by the Financial Industry Regulatory Authority (FINRA). To take this exam, a person must be sponsored by a FINRA member firm or a member of a similar self-regulatory organization (SRO).
The Series 7 exam is difficult and consists of 125 multiple choice questions that must be completed in 225 minutes. It must be combined with a separate Securities Industry Essentials Exam, which consists of 75 questions and lasts 105 minutes.
These exams will permit a broker to buy and sell most securities, may be other exams required to trade certain things. For example, someone who wants to buy and sell municipal bonds may have to take the Series 53 exam. There are also other required exams, including the Series 66 and Series 63 exams, to be registered in various states.
To make it as a successful stockbroker, you’ll need to work long hours, especially in the beginning when you’re building your pipeline or list of clientele. The job consists of advising clients and requires a strong ability to sell—since you’ll earn your pay through commissions.
If you communicate well with people, can build rapport easily and handle rejection well, you’ll have an easier time winning new clients. The job tends to be very competitive since one stockbroker can help you buy stock as easily as another can.
Online Discount Brokerages
It was once impossible to invest in stocks without going through a human stockbroker, but now most investors can buy and sell stocks and manage their own investments. Discount brokerage companies allow an individual to trade stocks using an online platform, usually for less than $10 per trade.
Discount brokerages have broken down barriers and lowered the cost of investing for most people, ensuring that trading stocks is no longer restricted to the wealthy. This is not to say that stockbrokers can’t provide a valuable service. They can help execute complicated trades and provide expert advice to investors. But if you’re an average investor who simply wants to purchase 20 shares of a well-known company, a human stockbroker isn’t necessary.
Some people and institutions will always need assistance to buy and sell stocks. Millions of stocks and other securities trade on the New York Stock Exchange alone every day, and not all trades will be executed using computers.
But the number of stockbrokers has declined. FINRA reported 630,132 registered representatives as of December 2020, down from 672,688 a decade before. FINRA reported more than 5,000 member firms in 2007, but 3,726 at the end of 2020.
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