How to pick your brokerage firm

When making this decision, look first for service, then low trading costs and good value.

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Are you getting all you can out of your current brokerage firm? Choosing the right broker and maximizing the services you get can be the foundation for successfully managing your investments.

Three factors to consider are: Does the broker offer the services you want? Are the trading costs relatively low for those services? Does the broker offer better value than others do?

Look for the services you want

One of your top priorities when seeking a broker should be whether that firm provides the services you need to achieve your investing objectives and implement your strategy. For example, does the broker allow you to buy and sell stocks, options, ETFs, mutual funds, bonds, and IPOs?

Additionally, you may want to seek a broker that offers all the tools and resources necessary to make informed decisions, whether that is on your own or with the help of a professional. Does the broker offer:

Keep costs low

Along with making smart investing decisions with the aid of tools and resources, maximizing your total return involves managing costs. Price is a top consideration, particularly for active investors. There are a number of costs to consider when choosing a brokerage firm. Commissions are a primary one for the active investor.

An even better way to lower your commission costs would be to consider investments that don’t have any. For instance, Fidelity.com offers more than 4,700 no-transaction-fee funds1, as well as the ability to purchase online 91 commission-free ETFs.

Costs aren’t a factor for just stocks, options, and funds. If you have bonds in your portfolio, buying-and-selling costs should be considered as well. Avoid brokers with hidden fees or markups. Fidelity has fully transparent bond pricing, with a $1 concession per bond online, and no hidden fees or markups.

Seek total value

Although costs are an important consideration, if you are thinking only about commissions when choosing a broker, you might miss the bigger picture. “Commissions are only one part of it,” says Ram Subramaniam, president of Fidelity Brokerage. “Execution quality, including price improvement, is a key part of our value proposition, especially for active investors.”

Price improvement occurs when a trade placed while the market is open executes at a better price than the prevailing National Best Bid or Offer (NBBO). For example, if a customer places an order to buy 200 shares of ABC stock “at the market,” and the bid-ask spread at the time is $15.75–$15.95, the customer is “due” the ask price of $15.95. However, if the customer’s order executes at $15.90—$0.05 below the ask price—that’s a $10 price improvement.

According to June 2016 data, Fidelity’s average price improvement on a 1,000-share order is from six to nine times better than the industry average,2 which can be a huge win for customers.

Customers can see the dollar value of price improvements on their orders, too. When an order that received price improvement has executed, customers can go to the “Activity” tab on Fidelity.com and see the price improvement amount, along with the rest of their order details. (This detail is available only on the day the order executes.) Also, customers can see the total number of price-improved orders and the dollar value of savings from price improvement on a month-to-date, year-to-date, and rolling 12-month basis on Fidelity.com.

Investing implications

There’s nothing wrong with being picky when deciding which brokerage firm to go with. After all, the decision you make could have a big impact on your bottom line. When making the choice, make sure your broker is adding value by providing all the services you need—at a low cost. That’s called getting your money’s worth.

Learn more

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Free commission offer applies to online purchases of Fidelity ETFs and select iShares ETFs in a Fidelity brokerage account. Fidelity accounts may require minimum balances. The sale of ETFs is subject to an activity assessment fee (of between $0.01 to $0.03 per $1,000 of principal). iShares ETFs and Fidelity ETFs are subject to a short‐term trading fee by Fidelity if held less than 30 days.
Minimum concessions apply: Online $8; if traded with a Fidelity representative, $19.95. For U.S. Treasuries traded with a Fidelity representative, $19.95 per trade. Fixed income trading requires a Fidelity brokerage account with a minimum opening balance of $2,500. Rates are for U.S. Dollar‐denominated bonds, additional fees and minimums apply for non‐Dollar bond trades. Other conditions may apply. See Fidelity.com/commissions for details.
Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Prior to trading options, please read Characteristics and Risks of Standardized Options, and call 800-343-3548 to be approved for options trading. Supporting documentation for any claims, if applicable, will be furnished upon request.
ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund.
Please note that concessions may impact the total cost of the transaction and the total, or "effective", yield of your investment. The offering broker may separately mark up or mark down the price of the security and may realize a trading profit or loss on the transaction.
Other concessions apply if traded with a Fidelity representative. See Fidelity.com/commissions for details.
Fidelity's Active Trader Pro PlatformsSM is available to customers trading 36 times or more in a rolling twelve‐month period; customers who trade 120 times or more have access to Recognia anticipated events and Elliott Wave analysis.
System availability and response times may be subject to market conditions.
1 Other fees and expenses applicable to continued investment are described in the fund’s current prospectus.
2 Investors executing a 1,000 share marketable order at Fidelity in 2014 saved on average $8.40 on that transaction versus the quote at order entry, while the industry averaged $1.30 in savings.
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Before investing in any mutual fund or exchange‐traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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