Online Brokers:
Selecting a broker for your needs
 

 

 

 

    Purpose

    The purpose of this web page is to introduce investors to Internet resources about online brokers, investing tips, investment scams, and educational tools. Links to some of the United States government agencies, state government agencies, trade associations, online magazines, and research firms are all included in order to help you make the right choices.

     

    Start Here: Educate Yourself

    If you are unsure how to invest in securities or how to select a broker, you should visit all three of these sites. These sites provide excellent tools and information to educate you about investing and about the securities industry. In order to select the best broker for your needs, you need to understand the type of investor you are.

    Are you ready to be an online investor? Take the quiz and learn if you are ready to invest on your own.

    Investing Online Resource Center
    For information about investing myths, your investing rights, brokerage ratings, and current news about brokers, this is the place to start. The Investing Online Resource Center (IORC) is an independent, non-commercial organization dedicated solely to serving the individual consumer who invests online or is considering doing so.     The IORC is a project of the Securities Division of the Washington State Department of Financial Institutions, which is a state government agency.

    Securities and Exchange Commission (SEC)
    The SEC is a U.S. government agency that was established in 1934. SEC's primary mission is to protect investors and maintain integrity of the securities market. The SEC's Office of Investor Education and Assistance is a great place to visit for  investing tips, to file complaints, to learn how to avoid scams, and to read other great education guides. Links to other relevant web sites are also included. For an article about the SEC's position on daytrading and online investing, read the SEC Chairman's article Plain Talk About On-line Investing.

    Federal Consumer Information Center
    The U.S. government provides free online versions of education pamphlets about hundreds of consumer issues. For information about investing, securities, and brokers, select the Money section, scroll down to the Investing & Saving category, and browse. This is a great site to visit!

     

    Associations

    The securities-related associations provide educational resources, warnings of scams and frauds, links to other resources, people to contact, and lots more.

    Alliance for Investor Education (AIE)
    The AIE's web site, Investor's Clearinghouse, provides information about scams, selecting advisors, mutual funds, bonds, retirement planning, savings tips for kids, and much more.

    Investment Company Institute (ICI)
    The ICI is the national association of the American investment industry, including mutual funds. The site does provide educational resources about mutual funds and links to web sites for all types of investors, including women, kids, and retirees. The Investor Awareness section is great for consumers.

    NASD Regulation, Inc. (NASDR)
    The National Association of Securities Dealers, Inc. (NASD) has established the NASDR, which helps to regulate, monitor, and discipline stock brokerage firms. NASDR provides services for investors to file complaints, learn about a brokerage firms financial and disciplinary history, and guidelines for selecting a broker.  The Investor Resources section is a good entry point into the NASDR web site.

    North American Securities Administrators Association
    The North American Securities Administrators Association (NASAA) is the oldest international organization devoted to investor protection.  Membership includes securities agencies in the United States, Puerto Rico, Canada, Mexico, and the District of Columbia. In order to file a complaint, learn about scams in your state, and protect yourself from securities fraud visit this site and locate your state's securities office.

     

    Online Brokerage Ratings

    Everyone of the ratings and reviews are different. In order to truly understand a online broker's strengths and weaknesses you should study several of the surveys listed below.

    CNNfn
    An article, "Web Broker Buying Guide," written on March 16, 2000 by one of the CNN journalists discusses how a consumer should select an online broker. The article also covers investment details about the top ten largest brokerages.

    Forrester
    Forrester is an independent research firm that reviews e-businesses. Forrester compiles its research by first conducting consumer surveys and then reviewing and testing the top sites. The Forrester PowerRankings for Brokerages measures: advice and market information, customer service, features and content, transacting, usability, and value. 

    Gómez Advisors
    Gómez Advisors specializes in helping e-businesses by rating and reviewing their web sites, services, and customer satisfaction.  Gómez ranks online brokers into several categories: ease of use, customer satisfaction, on-site resources, brokers for the hyper-active trader, brokers for the serious investor, brokers for the life goal planner, and brokers for the one-stop shopper.

    Hoover's List of Lists
    Although Hoover's does not rank or review online broker's, the site does include a few links to sites that do. The lists are not always the most current, but the information may still be useful to you.

    Keynote Systems
    Keynote claims it is the internet performance authority. Keynote's ranking system is unique in that it reviews a broker only by its speed.  The company ranks online brokers by determining the total time it takes to complete a transaction. A transaction includes the following: logging on to the site, checking a stock quote,  completing the order form to buy a stock, and logging off. Weekly reports and past reports are available at the Keynote Web Broker Trading Index web page.

    TheStreet.com
    An article written for the March 30, 2000 issue of TheStreet.com (TSC) discusses customer satisfaction with online brokers based upon an online survey of TSC readers. The complaints and comments may be useful to you.

    The Whiz.Com
    The journalists at this online magazine bought securities from five leading online brokers and compared the pros and cons of each, such as commissions, minimum account balance and trade success rate. The article was a part of the January 28, 2000 issue. TheWhiz.com is produced by ILife.com, which produces both print and online publications.

     

     

    Compiled by: Kristan Majors

    Date created: April 30, 2000

    This page was created as a class assignment for
    CLIS 748:Business Reference for Dr. Robert Williams in the College of Library and Information Science at the University of South Carolina.