To figure out if you need an investment broker (and what kind), start by figuring out what it is you want to do with your investment cash. Then consider what you’ll need to make each of these goals easily achievable. Consider the scenarios outlined below.

1.) I’m looking to buy and sell shares of stock frequently, because I enjoy the game and think I can win by doing better than the overall stock market.

• Brokerage firms usually charge a commission – maybe $5, maybe $50, depending on the firm – each time you buy or sell stock, mutual fund shares, or other securities. If you’re buying and selling often (and we don’t recommend this), commissions will matter a lot. If you have an account of decent size, you can trade at very low commissions, but the broker will charge you a fee based on the size of your assets.

• You may also want to use the proprietary investment research reports or tools that your brokerage firm licenses or creates. Traditional firms like Merrill do a lot of original research, and you probably won’t be able to access it at, say, Schwab, unless you were willing to pay for it.

2.) I’m not a trader, but I do add money each month to my savings and want to invest it as soon as it lands, which means I do need to trade (or at least buy) a fair bit.

• Again, the commissions that brokerages charge when you buy or sell stock, mutual fund shares, or other securities can add up.

• But brokerage firms like Schwab, Fidelity, E*Trade, and others allow you to purchase shares of many popular mutual funds without spending a cent. Bank of America and Wells Fargo, meanwhile, offer free stock trades across the board for certain customers, instead charging fees based on the size of your overall assets.

3.) I’m investing money for a relatively short-term goal (e.g., buying a home in five years) and probably not moving it around all that much.

• If you’re saving up for a short-term goal, such as a down payment in three to five years, you may not be starting with much money. Many firms offer better privileges, lower fees, and more personalized advice only to customers who have larger amounts of money.

• If you’re investing only a small amount, you may want to seek out a firm that makes a point of welcoming younger investors or those who haven’t saved much yet. The discount brokerages are probably a better bet for these purposes.

4.) I’m setting up retirement accounts – or rolling them over from previous employers – with the intention of hanging on to them for 30 or 40 years.

• So you’re in it for the long haul. If you start early enough, you’ll soon have a sizeable amount of money – enough to qualify you for lower fees.

• Once you don’t have to worry about fees anymore, you may want advice from time to time about the right way to allocate your assets – what to invest within each category (stocks, bonds, cash, etc.). Most firms can help with this, and will often let you talk to an advisor for free before you decide to move your money to the firm.

Want to Know More?

• What's a Brokerage Firm?
• Advice on Choosing a Brokerage Firm
• Grilling Guide: Questions to Ask When Picking a Brokerage Firm