Online Brokers

Online brokers offer many of the same services that discount brokers do, though of course without physical offices. Most of the transactions they process come through their website, which may have a variety of options for you to consider. For example, some online brokers offer third-party research or other investment tools, such as portfolio monitors and price alerts if those are important to you.

While some online brokers will process phone orders, that is not their preferred method of communication. If you are comfortable working online and dealing with services over the web, this may not be an issue. However, what happens if you lose your internet connection or you happen to be somewhere your smart phone doesn’t have a signal and you need to place an order with your online broker? Also, there have been times during heavy market activity when some online brokers have had difficulty keeping up with incoming volume, which may mean their website is unavailable, perhaps at the time when you need it the most.

As a rule, online brokers may offer the best rates and faster service in processing your orders. However, you could also say the same thing about many discount brokers. Squeezing a few dollars off commissions is less important than the confidence that your order will be accepted and executed in a timely and correct manner. There are some people who would much rather deal with an online service than another human. If that’s you, an online broker or a discount broker may make perfect sense.

With online brokers, it is especially important that they have prompt and reliable customer service, whether you reach them over the phone or online. It is a given that in the middle of an important transaction something will happen and you will need help resolving the matter. There’s nothing worse than not knowing if your order has been accepted or not when the market is extremely volatile.

The pros of online brokers:

Online broker cons: