Here are some key factors to consider when researching online brokers and selecting the right one for your financial goals.

What is an online broker?

An online broker is a firm that allows you to buy and sell investments, such as stocks, bonds, exchange-traded funds (ETFs), and mutual funds, online through a digital platform or app. You may pay an account fee or commissions on individual investments, though this varies by broker.

Online brokers can be DIY (meaning you manage your own investments), managed (meaning an investment professional does it for you), or robo-advisors. Those in the last category are automated investment platforms that build and manage your portfolio based on your risk tolerance and goals.

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10 factors to compare when choosing an online broker

There are many online brokers to choose from, so weigh your options carefully before choosing which company to open your account with. You should consider:

1. Trading fees and other costs

Online brokers can charge many fees, including maintenance fees charged monthly, quarterly, or annually, and transaction fees. These can include commissions, mark-ups and markdowns, and sales loads, which you might see if you invest in mutual funds.

Some brokers also charge a subscription fee (for example, as of this writing, Robinhood charges a $5 monthly fee for its “Gold” brokerage account).

Other fees a broker might charge include:

• Inactivity fees, if you don’t use your account enough in a certain period.
• Wire or transfer fees, if you’re transferring cash or assets in or out of the account.
• Advisory fees, if you have professional help with your portfolio.
• Annuity and retirement plan fees, if you invest in either of these vehicles.
• Closing fees, if you opt to close your account.

Fees can make a big difference in your long-term investment returns. According to analysis from the Securities and Exchange Commission, investing $100,000 in an account with 0.25% annual fees might net you nearly $30,000 more over 20 years than a broker charging 1% in fees.

2. Account minimums

Some brokers require a minimum deposit before you can start investing. There may also be a minimum balance you must keep in your account, a minimum amount of time you must stay invested, or, sometimes, a minimum number of trades or purchases you must make within a certain period (per quarter, per year, etc.)

With some brokers, the amount you have in your account or the amount of investing activity you take part in will affect the fees you pay, so it’s important to have a good idea of how you’ll use the account when looking at these numbers.

3. Investment choices

Online brokers vary widely in the assets and investment vehicles they offer. Some keep it simple, with just stocks, bonds, and mutual funds, while others have more advanced investment offerings, like options trading or futures.

Here are some investment choices you might see at online brokers:

• Stocks
• Bonds
• ETFs
• Mutual funds
• Options
• Futures
• Cryptocurrency

It’s usually smart to have a diversified portfolio that contains a variety of assets, as this can reduce your overall risk of loss. Choosing a broker that offers several different investment vehicles can help you achieve this goal.

4. Types of accounts offered

Brokers can offer several account types. Each is designed with different goals in mind, so choose a broker that offers the right one for your objectives.

The main account types include:

• Taxable brokerage account: This is the traditional type of brokerage account. You invest in various assets and securities, then pay taxes on what your investments earn each year.
• Retirement accounts: These can include IRAs (Roth and traditional) and 401(k)s. You contribute money and invest in assets with a specific retirement date in mind. 
• Custodial accounts: You can use these to invest for your children or other dependents. People often use these for education costs.

5. Trading platform and mobile app

With an online broker, you will use a digital dashboard, trading platform, or mobile app (or a combination of all three) to manage your account and investments. These can vary widely in usability, layout, design, and other factors, so you’ll want to evaluate how each broker’s platform aligns with your technological abilities and skill.

To gauge this, you can:

• Read online reviews and ratings: Past customers may note how user-friendly the broker’s platform is.
• Check app stores: Mobile app stores also have reviews and ratings. These can help you assess the quality of a broker’s Apple or Android app.
• Test them out yourself: You may be able to sign up for a trial account or peruse a broker’s app or platform before applying for an account.

You might also search for screenshots of a broker’s platform in Google Images or app stores. These can give you an idea of what you can expect as an account holder, too.

6. Research and investing tools

Many brokers offer tools to help you research investments, monitor markets, analyze data, and make more effective investment decisions.

Some brokers also offer practice trading tools, which let you try your hand at investing without putting real money on the line. Charles Schwab, for instance, offers the thinkorswim paperMoney tool, while TradeStation offers a trading simulator. Another option, eToro, has a $100,000 virtual portfolio you can use to test the waters.

7. Educational resources

Online brokers will often have educational resources available to account holders. This might include general investing information (investment strategies, how-to guides, blogs, articles), video content, or calculators and other tools.

Some brokers may also provide detailed market data, charts, and analysis you can use to make your investment decisions, while others offer full-on courses or trading “academies” to help you learn investing from the ground up. This info can be particularly helpful for newer investors.

8. Customer service

There may come a time when you need help with your account, have a question, or need some other form of support, so you’ll want to look at a broker’s customer service options ahead of time.

First, check each broker’s contact methods. These can include phone, email, online chat, or in-person assistance, if the broker has brick-and-mortar locations. Availability matters, too. What days and times is customer service available? You should also look into any after-hours contact options that might be available.

Additionally, you may want to read some online reviews of brokers you’re considering. These can often shed light on past customers’ experiences with client support. Trustpilot and the Better Business Bureau are good places to start.

9. Cash management and uninvested cash

You will also need to look at how brokers handle uninvested cash in your account. Some offer “sweeps,” which transfer your money into a deposit account or money market fund that earns interest until you use the funds. Others may simply leave the uninvested cash sitting in your brokerage account.

If a broker you’re considering uses the sweep method, ask which bank or financial institution your funds will be swept into. You’ll want to be sure they’re financially stable and have the right FDIC or SIPC protection (more on this below.)

10. Security and regulatory protections

If you’re making financial moves online, keep security top of mind. First, consider the digital measures a broker takes to keep your information safe.

These can include:

• Multi-factor authentication
• Strong password requirements (and changing those passwords frequently)
• HTTPS websites
• Data encryption
• Biometric access, like fingerprints or facial recognition on apps

You should also make sure the broker has Securities Investor Protection Corporation (SIPC) protection. This insures your money if the broker goes bankrupt and lacks the funds to pay you back. Much like how Federal Deposit Insurance Corporation insurance is important if you’re using a deposit account of some kind to hold cash you’re not otherwise investing, this serves a similar purpose.

Which online broker features matter most for you?

Before you can decide what broker to use for your account, you’ll need to consider which of the above factors and features are of most value to you. For some investors, low fees may be the No. 1 priority, while for others, it may be customer service, security, or educational and research resources. Understanding what’s most important can help you zero in on the right broker to go with.

You can also consult a financial professional for guidance. They may be able to point you toward the right broker and investment strategy for your goals.

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The takeaway

There are many online brokers you can choose to invest with, and their offerings, fees, tools, and other features can vary widely. Make sure to compare your options, keep your priorities in mind, and choose the one that’s best-suited to your individual goals and budget. What’s right for one investor might not be the best fit for another.

Frequently asked questions

What is the best online broker to use?

The best online broker depends on your priorities as an investor. Online brokers can vary widely in fees, products, account types, and other features, so it’s important to research all your options before choosing where to open your account.

What online broker should I use as a beginner?

As a beginner investor, you should probably focus on choosing a broker that offers an easy-to-use interface, good educational resources, and a variety of investment products to help you diversify your portfolio. Compare several options before choosing which online broker to use for your investment goals.

What fees do online brokers charge?

Online brokers can charge a variety of different fees, including account maintenance fees, subscription fees, per-transaction fees, and fees for inactivity or closing your account. Do your research and compare the fees and offerings of several brokers before deciding which broker to open your account with.