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Fri Feb 6, 2015, 04:37 PM

Who needs a traditional brokerage firm anymore?

Planning up for retirement? Groups like Vanguard and T. Rowe Price make it simple to set up IRA's. Playing the stock market? There are many do-it-yourself sights with low, flat fees and tools to do your own research. My elderly dad goes the traditional border who, while a nice guy I can trust, charges a 7% commission. Now, my dad is old-school who still checks his investments in the newspaper. And of course the 1-percenters need help managing so many assets. But the rest of us? We should be able to do it on our own.

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Arrow 9 replies Author Time Post
Reply Who needs a traditional brokerage firm anymore? (Original post)
RandySF Feb 2015 OP
GeorgeGist Feb 2015 #1
A HERETIC I AM Feb 2015 #2
RandySF Feb 2015 #3
Common Sense Party Mar 2015 #7
SheilaT Feb 2015 #4
progree Mar 2015 #5
RandySF Mar 2015 #6
recycled60 Aug 2015 #8
bucolic_frolic Sep 2015 #9

Response to RandySF (Original post)

Fri Feb 6, 2015, 04:59 PM

1. 7% is simply foolish.

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Response to RandySF (Original post)

Sat Feb 7, 2015, 09:03 AM

2. People who are either unwilling or unable to properly manage a portfolio any more complex...

than a few Mutual Funds and some shares of stock.

The fact is, the vast majority of Americans are woefully unprepared for what you suggest and they either don't have the time or they don't give a shit, not to mention couldn't tell you the difference between a blended fund, a balanced fund, a growth fund or a Christmas fund.


And FWIW, your "charges a 7% commission" statement is, if I may say, ambiguous. 7% of what? Assets under management? Of gains? Per stock transaction?

In some trades, 7% is perfectly reasonable. In other situations, it is highway robbery.

It's all relative.

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Response to A HERETIC I AM (Reply #2)

Sat Feb 7, 2015, 11:17 AM

3. 7% per trade.

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Response to RandySF (Reply #3)

Thu Mar 26, 2015, 05:12 PM

7. 7% per trade? Wow. I've never heard of anything that high. nt

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Response to RandySF (Original post)

Sun Feb 8, 2015, 05:13 PM

4. I have a financial guy

 

who used to be with one of the Big Name first, and about three years ago joined a small partnership. He knows about financial things that I haven't a clue about. I am making more money from my investments now, and the tax filing is vastly simpler. Most people who think they can do all their trading by themselves don't do all that well in the market for lots of reasons. One is that they trade more often than they should. The other thing to understand is that your small trades are going to be filled after those of the big guys.

However, if you're happy with what you are currently doing, stick with it.

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Response to RandySF (Original post)

Wed Mar 4, 2015, 02:58 PM

5. I wouldn't trust someone who charged 7%

And if he's acting as a financial advisor too (and not just an order-taker), he's probably constantly recommending trading -- sell this, buy that, Kaching! Lots of churning - virtually a metaphysically certain recipe for serious underperformance for the portfolio, but will make this trusty nice guy wealthy -- assuming he has enough people ignorant enough to pay commissions like this.

Myself, I do no stock trading at all. I have just one stock which I inherited years ago. The rest of my financial investments are in (almost entirely index) mutual funds and ETFs. With Vanguard and Fidelity. In buy-and-hold mode with, over the years, incremental moves towards more diversity (moving towards more international and less U.S.).

Vanguard and places like that charge like $7 / trade online, or $25 by phone. For stocks and ETFs.

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Response to progree (Reply #5)

Wed Mar 4, 2015, 11:08 PM

6. I don't know how dad came about choosing this firm

BUT his broker seems honest and, when it comes to what and/or sell, is actually more reserved (dad loves to play High Roller). But yeah, 7% is a bit steep when one is as self-directed as I am. BTW I get my ETF's through Scottrade.

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Response to RandySF (Original post)

Wed Aug 19, 2015, 09:39 PM

8. I like the Couch Potato approach.

 

Rebalance annually.

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Response to RandySF (Original post)

Tue Sep 8, 2015, 06:19 PM

9. My Take

after decades of floundering, is that all types of brokers have a place
in an investment portfolio.

Trade your own account? Sure, but watch those stops, and do lots of
reading of books on how to invest. There is no substitute.

Managed ETF and rebalance? Sure. It's a no brainer. Some are very reasonable,
1-2% annually or less.

Major mutual fund company? Yes, just don't expect advice. I always
try to invest when the market is in a down period. Crash is even better.
No matter how much they tout indexing, timing is important to the extent
that investing at the top is a killer.

Major brokerage? Yes, for complex investments, perhaps MLPs, or global
stocks, or annuity or tax planning. Make anyone who's charging
full commission - 7% I think I'm aware of what Main St. firm that is - make
them earn their fees. You want their best recommendations for the future Pricelines,
Amazons, Apples, and Proctor & Gambles of the world. Something you can put aside
for 30 years and have $2-4000 grow into vacation home equity.

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