As you invest in the stock market, you will encounter fees and commissions from the professionals and services you use along the way. Typical stockbroker fees will depend on whether you use a full-service firm or one that offers fewer services. Don’t expect to avoid all fees, but you may succeed in trimming your broker budget if you opt for a discount brokerage.
Hiring a full-service brokerage firm with investment advisers will provide you with extensive research and hand-holding, but the commissions will be higher. Commissions usually vary with the amount of the transaction, the amount of business you bring to the firm, how much service you require of the firm and the size of the firm.
Sometimes called “brokerage fees,” transaction fees cover a broad range of services, including purchase, delivery and, possibly, advice. Service fees may be a flat fee, a percentage of the transaction or a combination of both for transactions above a specific dollar amount. Service fees will likely vary depending upon how a client places an order -- over the Internet, by telephone or utilizing the assistance of a broker.
Account and Service Fees
A brokerage firm may charge regular maintenance fees as a part of keeping an account active. In connection with maintenance fees, some firms also charge inactivity fees if a client fails to place a specific number of orders over a specified time. If a broker charges an inactivity fee, avoid the fee by keeping your activity level above the minimum. Additionally, a broker may also charge a minimum equity requirement charge if an account balance falls below a minimum balance.
Data and Subscription Fees
Some brokerage firms may charge small fees to cover the data provided to clients. For example, if clients receive access to real-time stock market quotes and other market analysis, a firm may add nominal charges for these subscriptions.
The fees involved to transfer your electronic holdings from one broker to another broker are transfer fees. Transfer charges may be a flat fee, or they could also be a percentage of the transfer amount. Transfer fees can discourage clients from transferring between brokerage firms.
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