Comments on: Which Broker? You Don’t Need One

By: TigerTime

TigerTime — Tue, 18 Aug 2009 17:17:54 +0000

TFB – I agree that when people start investing outside their 401k or 403b plan for the first time, their very first question should NOT be “Which broker?” However, I don’t think Vanguard, Fidelity, or any other major Mutual Fund company is the solution since they don’t address the fundamental issue. The first question should actually be a series of questions aimed at identifying the investor’s objectives and risk tolerances. IMO Mutual Fund companies don’t provide an OBJECTIVE and complete evaluation for the majority of investors, especially those investing for the first time outside of a company plan. I do believe that SOME advisors and brokers provide valuable services to their clients, especially new clients who are still in the early stages of retirement planning. In full disclosure, I’m not an advisor or broker, but I have worked for both strictly in analytical roles. Investing directly with Mutual Fund companies should be a function of investor education. For highly informed and educated investors, such as yourself and many others who have spent hundreds of hours researching investments and have the self-discipline to stay on path, direct Mutual Fund investing is a logical choice. Others should strongly consider researching brokers and advisors who are willing to put their clients interests first with scrutiny and diligence (Not just blindly accepting a referral from your best friend). After all, if you’re willing to entrust someone with helping you meet your retirement needs for years in the future, you should be willing to spend at least several hours researching them thoroughly. Below is a link from the SEC on how investors can research brokers and advisors:

http://www.sec.gov/investor/brokers.htm

Jack – The SEC provides an overview of Mutual Fund investing along with a glossary of key terms. However, it’s not easy to find if you don’t have the link!

http://www.sec.gov/investor/pubs/inwsmf.htm

By: T

Tue, 18 Aug 2009 16:51:35 +0000

indexfundfan – In what situation would you need to “complement” an investment portfolio with ETFs?

By: indexfundfan

indexfundfan — Fri, 07 Aug 2009 00:14:14 +0000

A brokerage account is needed if you want to purchase ETFs to complement with Vanguard mutual funds.

By: Jack Calhoun

Jack Calhoun — Fri, 31 Jul 2009 18:18:09 +0000

Good stuff. The terms in the investment industry are murky and confusing and the investing public needs to understand the nuances.

I agree that investors don’t need a broker, because the brokerage industry is built on a product-distribution model, not a client-service model. I am also a big fan of Vanguard as you are.

I do think that many investors will benefit from working with a fee-only, indepdent advisor (which, since I am one, admittedly doesn’t make me impartial), because I believe that investment success if predominately about controlling your emotions. Sooner or later most people blink and succumb to the day’s conventional wisdom, whether it is overloading in tech stocks in late 1999 or bailing out of the market in early 2009. It only takes a couple of deviations like that to destroy a lifetime of financial discipline.

For the steely minority who never, ever let short-term market conditions alter their long-term investment strategy — then Vanguard is definitely the right place to be.

By: © b e e n s w a n k

I’m a dull-time college student looking to make some strong long-term investments. I don’t know much about stocks, bonds, index funds etc. I’ve been looking into opening a Mutual Fund and/or IRA with Vanguard based on some basic research that I’ve conducted. I’m glad to see that I’m looking at the right company. This article has been most enlightening. Thank you.

By: Dave C.

Dave C. — Thu, 30 Jul 2009 14:49:53 +0000

That is a great post, it looks like it addresses some of the exact issues I’m working with. Thanks!

By: TFB

TFB — Thu, 30 Jul 2009 14:40:04 +0000

Dave - If the account minimum is an issue, maybe this previous post will help: Investing a Small Amount

By: Dave C.

Dave C. — Thu, 30 Jul 2009 13:01:47 +0000

I have an account with ING Direct’s Sharebuilder online brokerage service. It doesn’t have the cheapest commission fees by far, but it dovetails with my online savings account nicely, and the free dividend reinvestment + $4 regular investment plan is kind of nice.

I’d like to invest in some of Vanguard’s index funds, but the minimum capital investment is a little more than I’d like to put up at one time right now. I suppose I can just invest smaller increments in the ETF’s for those same funds, through Sharebuilder and such.