Ways to Evaluate the Performance of Different Investment Firms

By Wilbur H. Stewart
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25 May, 2018
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Comparing multiple online brokerage reviews is every bit as important to your success in the world of investing, as the actual act of investing itself. Do you think this claim is too far-fetched? Well, consider this scenario:

So you have expressed an interest in investing, but you aren't sure what exactly to invest in. Should you invest in stocks? Should you invest in bonds? How about mutual funds? How about commodities? There are so many different investment vehicles to choose from, that just the mere thought of trying to make your foray into the world of investing can be daunting and intimidating, at best.

So what do you do if you are absolutely clueless? Well, you could pick up some books and start researching for yourself. Or, you could turn to an expert for help. The best place to get professional help with devising an investment strategy that is individually tailored to your specific needs would be an online brokerage firm.

Okay. Now that you have resolved to hire the services of an online brokerage firm to help you out, you are faced with yet another layer of complicated and harrowing choices to make. Which online brokerage firm should you go with? How do you decide which one is the right one for you? Do they charge differently for their services than their competition does? What is their track record on actually turning a profit for the customers who invest with them?

These are all very good questions, and very important questions, at that. It shows that you at least know what questions to ask. That puts you in a league above the rest of the people who are so clueless that they just blindly invest in the first online brokerage firm that comes along and then promises them financial wealth, only to leave them hanging out to dry when the going gets rough.

In a nutshell, one of the best ways to evaluate the performance of different investment firms is to read the online brokerage reviews that have been left by other customers who have dealt with previously. What better way to get honest and candid opinions about a particular company than to read the reviews of people who have already dealt with them before you.

Of course, a quick study of a handful of online brokerage reviews may reveal a number of differing viewpoints. Obviously, you can expect to read nothing but rave reviews from a customer who has made money with the firm. And it should come as no surprise to you that you can expect to read rants, complaints, and accusations of fraud and incompetence from customers who have lost money by investing with the firm. This is hardly an unbiased way to evaluate different firms.

What you need to do is sift through the various online brokerage reviews and look for evaluations of certain key elements, regardless of how well the individual customer's portfolio has been performing:

How is the firm's customer service?
What are the firm's transaction fees and commissions?
How much education, training, and information does the firm offer their customers in order to empower them to make smarter investment decisions on their own?
How transparent is the investment process and the internal workings of the brokerage firm?
How sophisticated are the account management tools that the firm provides customers online?
How has the firm's funds been performing over the past several months, the past year, and the past several years?
How competent are the representatives of the firm in terms of their ability to help you, give you investment advice, understand your investing goals, and manage your funds?
Despite the brokerage's online tools, how reliable and accessible is the firm's offline presence?

The above list is by no means exhaustive, but it should give you an idea of what questions you should keep in mind as you evaluate the various online brokerage reviews that are out there. Researching various online brokerage reviews and choosing the right firm to work with is every bit as important as the actual act of investing your money itself. Not all brokerage firms are created equal. If you fail to choose the right company, you may be putting your money in the wrong hands.

C.L. King is a full-service investment bank and self-clearing broker-dealer founded in 1972. The company provides investment banking, equity research, sales and trading, and investor services to corporations and institutions. To learn more about company's services, please contact at 518.447.8050.