My previously-mediocre-but-not-horrible discount brokerage firm decided to start charging an annual fee… a fee higer than some full-service brokerages. I’m high-tailing it out of there ASAP, and I’m looking to do it without any tax implications. Although, even if I have to sell, the tax burden shouldn’t be too bad.
So, with the several thousand dollars in that account, I’m most likely looking at Scottrade. They have no annual fees and seem to be generally non-evil.
Currently, the entirety of my brokerage account is invested in AIVSX, American Funds’ “Investment Company of America” fund, which seems to do a good job of matching the S&P 500, but not much else. It also has a pretty ugly 5.25% up-front load fee, which pisses me off about as much—or more—than annual fees. In effect, every time I bought shares of this fund, I paid 5.25% higher than the market price per share, with the extra going to the broker. That also means that (put simply) if the fund was getting a 10% yield, it was only a 4.75% improvement over what I paid.
Fees like this on the smaller investors, like me, bug me to no end. It’s obvious the brokerage firms prefer the clients with large sums to invest. They are the people who make the brokers rich. The brokers should accept that (instead of giving the top investors breaks) and leave the little guys alone.
Updated October 14, 2016 and originally published September 29, 2004.