What brokerage to use?

[rllewis]

What are some recommended brokerage companies?  I have a lot of my PP at Schwab, but would like to diversify, so I don't have all eggs in that basket.  What do you guys recommend?  eTrade? Scottrade?  Others?

[clacy]

I too like to have some diversity of brokers.  I use Scottrade, TDAmeritrade and Vanguard.  I like all of them for various reasons.

I think TDA might be the easiest and cheapest to use for the PP.  They offer free trades on VTI, SPY, TLT, EDV, SHY and many other ETF's that are in the equity/LTT/STT mold.  Gold ETF's are the only trades you would have to pay for.  I really like their platform.

I also really like Scottrade, but in order to get free trades there you have to use mutual funds.  They have an extensive list so LTT, STT and stock mutual funds are easy to find.  Their stock commission is only $7 so for the gold purchases it's very inexpensive. 

I also like Vanguard but their trading platform and website are antiquated, IMO.  Very cumbersome.

[AgAuMoney]

I used Waterhouse before about 2002.  Switched to scottrade since they had a local office.

Opened a sharebuilder account a few years ago, now that is where I have my PP and a bunch of other accounts.  Still kept the scottrade accounts...

[frugal]

Hi,

if the account's money is all applied in ETFs is there any risk of losing them after a bankrupcy?

Only in case of a BIG FRAUDE, right? Is it possible?


Best regards.

[AgAuMoney]

if the account's money is all applied in ETFs is there any risk of losing them after a bankrupcy?

Only in case of a BIG FRAUDE, right? Is it possible?

There is always a chance, but yes, I suspect it would require a big fraud.

Your broker should have SEC insurance coverage on your account up to about 1/2 million dollars in securities (not cash but ETFs should be covered).  Many (all the big names, probably most of them) will have additional insurance beyond the SEC coverage.  This coverage has limitations.  I.e. it does not protect market value but does protect against broker bankruptcy and I think fraud.

With that said, it is good to understand the risks...

A margin account is more risky than a standard brokerage account.  The agreement allows the broker to borrow your shares.  Usually they won't unless you are using margin, but I don't recall that being a limitation imposed by any of the agreements I've read.  Your shares are "hypothecated" to the broker, and if the broker borrows them they are "rehypothecated" to whomever borrowed them. The insurance coverage will not cover if they are lost this way.  Rare, but possible.

ETFs add yet another layer or two.  There is an ETF custodian involved that holds the actual assets.  There is also the ETF manager.  I think the insurance covers against fraud at this level.  This is all added to the risk of a brokerage account (or margin account).

A Closed End Fund is like an ETF.

A mutual fund is like an ETF, except you can often go directly to the management instead of using a broker, and often the management is also the custodian.  If held in a brokerage (or margin) account the risks are additive just like an ETF.

An ETN is often confused with an ETF, but they are very different.  An ETN holds credit instruments that mimic the assets that would have been held by a similar ETF.  It adds credit risk to the risks of an ETF.

[frugal]

AgAuMoney
AgAuMoney
AgAuMoney

I have some ETC's because I used 3-4 instruments for each asset class. Can it be?


Thank you