Top Full Service Brokers Overview
Discount brokers are a great option for investors who have the time and ability to manage their own finances. But for investors who prefer professional management of their assets in exchange for higher fees, a full-service broker is the better choice. Here's a rundown on five of them.
A division of Bank of America, Merrill Lynch provides investment services to customers all over the world. In the United States, customers can have an account managed for 1.5% to 3.1% of assets annually. The exact charge depends on the account's balance, whether it's a retirement or non-retirement account, and the customer's desired portfolio strategy. Accounts above $25,000,000 can negotiate an asset-based fee lower than 1.5%. Merrill Lynch's lower-cost subsidiary, Merrill Edge, offers managed accounts for a low 1% with no commissions for trades.
Beyond traditional managed brokerage accounts, Merrill Lynch also offers 529 education savings plans, a variety of IRA's, and an Education Savings Account. Clients can reach a Merrill representative over the phone 24 hours a day, 7 days a week, or during normal business hours at one of the broker's many locations throughout the U.S. Cash management services are also available via the Cash Management Account. It does have a $125 annual fee for clients with less than $125,000 in assets, although ATM withdrawals are free.
Founded in 1962, Raymond James today has offices throughout the world, including hundreds in the U.S. Besides investment advice and financial planning services, Raymond James also provides portfolio management. The price varies from 1.0% to 2.25%, depending on account balance. Commissions aren't free. Stock and ETF transactions cost $9.95, while bonds, option contracts, CD's, and mutual funds carry a $30 charge on both the buy and sell sides.
The company provides free stock analysis and economic commentary to its clients. This material includes reports on over 1,300 stocks. The broker also offers a selection of IRA's and a 529 plan. Closing an IRA does cost $100. Regular brokerage accounts have an annual fee of $50, which is waived for accounts above $100,000.
The broker also operates its own FDIC-insured bank. Clients can receive checks and a Visa debit card. The account does carry a $150 fee for investors who have less than $500,000 in assets. ATM fees are reimbursed only for clients who have $250,000 or more.
Beginning in 1922, Edward Jones has been offering investment advice and portfolio management services for more than nine decades. Today, it has over seven million clients. For managed accounts, the broker charges an asset-based fee between 0.85% and 2.5%. The annual charge varies based on account size and whether the client wants to invest in debt, equities, or both. The fee is calculated and billed on a monthly basis. The portfolio management fee can be negotiated in some cases.
The broker does not charge commissions for trades. It acts as both advisor and custodian of assets for its clients. The company has more offices than any other broker in the United States, which makes it a good choice for investors in small towns who want in-person financial assistance.
For investors who don't need in-person service, there is Personal Capital. This company is very new, founded just in 2009. It offers both free and paid financial services. On the free side, clients get financial software that calculates net worth, cash flow, portfolio allocations, income reports, investment returns, and more. A retirement planning tool is also available free of charge.
On the paid side, portfolio management fees are based on account size and vary between 0.49% and 0.89%. It takes $10,000,000 to get to 49 basis points. There are no fees to open an account, and there are no annual or maintenance fees. The firm does require a minimum deposit of $25,000 to open an account. Commissions in a Personal Capital account are free.
For investors who want the lowest management fees in the industry, there is TradeKing. The broker charges just 0.25% annually for its portfolio management services. Amazingly, the broker isn't a robo-advisor. It somehow is able to charge its very low fee using human advisors. There is a $3 minimum per quarter in advisory fees, and the firm also requires a $500 deposit to open an account.
TradeKing Advisors only uses passively-managed ETF's. Thus, many potential stocks and mutual funds are left out of the picture. That, apparently, is the price of 25 basis point accounts. Commissions are not charged for the purchase or sale of the ETF's. There is no fee to open an account, nor is there any fee to close a taxable account. Unfortunately, the broker doesn't do any financial planning.
Investors who aren't confident enough to manage their own finances can find several good options where professionals will do it for a modest fee. If you choose
this option, be sure to ask the broker plenty of questions to find out what they offer, and what they don't.
Updated on 10/7/2016.