Many people choose investments based on what’s available at the institution where their money sits. The process should be the opposite. You want to figure out what investments you plan to hold and then pick the best institution where you can hold them.
Securities available
For stocks and bonds, you are best served by a discount brokerage. You will have access to all the securities and services of a full-service broker but at far less cost.
If you seek index ETFs, many discount brokers such as E-Trade and TD Ameritrade provide access to very low expense exchange traded funds free of trading costs. Some firms such as Fidelity, Schwab and Vanguard also offer excellent low-cost proprietary index ETFs.
If you seek mutual funds, the best discount brokers have excellent platforms with a wide choice of no-load index and managed funds. You can also buy low cost, no-load mutual funds directly through fund families.
For CDs, many discount brokerages have platforms wherein you can find the highest rates in the country. If your needs are simple, local banks provide convenient, if sub-maximal, choices.
Needed services
For paying bills and getting cash, you will need a bank or an institution with banking services. Some discount brokers like Schwab provide all these services at low or no cost. Most financial institutions now allow you to link your accounts, internally and at other firms. Thanks to these links, you should be able to invest anywhere and bank anywhere with unhindered convenience. You need not invest with a sales-fee laden outfit simply because its reps have desks at your bank.
Cost
With assured access to the securities and services you need, minimizing expense is vital. The worst practitioners on Wall Street rip off their clients by passing off their high fees and commissions as normal costs of doing business. Deregulation, competition and technology have enabled well run companies to reduce trading costs dramatically and provide many services free of charge. With identical market and exchange related costs, the only reason one firm charges more than another for financial services is abject greed.
Don’t be victimized. Choose an institution that charges nothing to open and maintain an account, nothing to buy and sell mutual funds, and less than $10 to execute stock trades. Some suggestions:
There are other fine institutions. Compare their features and costs to those of the companies listed here, and act logically.