Finding the Best Broker for Your Online Needs
METAXAS: Today, about 3 million households trade online, up 36 percent from a year ago. And brokerages are doing their best to lure more customers. But many are ignoring the basics customers want most. Joining me now with a look at the online broker is senior editor Jim Frederick. And welcome to the program.</s>JIM FREDERICK, SENIOR EDITOR, "MONEY" MAGAZINE: Hi, thanks.</s>METAXAS: You know, it used to be that the online brokers competed primarily on price. They tried to drive that price down and attract the most customers. But from your survey, that aspect of the business has really changed.</s>FREDERICK: That's right. Well, the brokers still advertise based on price, but we've found that customers are really more concerned about customer service or reliability, something that not many brokers are paying enough attention to these days.</s>METAXAS: All right, at "Money" magazine, you do this survey of brokers. Who came out first this year?</s>FREDERICK: This year it was quite a surprise, because most people think of them as a mutual fund company, but Fidelity finished first this year.</s>METAXAS: How reliable are these rankings, in that Schwab was first last year, they dropped to fourth this year, National Discount Brokers was second, they dropped to 15th? Is this almost, you know, a random result, or are you convinced that Fidelity got that much better this year?</s>FREDERICK: Oh, it's not a random result. That's a good question, though. We found that the brokerage industry is changing so much -- I mean, it changes virtually every day. We do this survey once a year, and there's two factors that the people who finished second last year didn't do as well this year. The first, we found that the winners this year, people like Fidelity, Ameritrade, Merrill Lynch, totally overhauled their offerings in a way that Charles Schwab and Endy Bay (ph) really kind of treaded water. On the other hand, customer service really took a downturn among Charles Schwab and especially National Discount Brokers, where we were on hold for, you know, up to 45 minutes sometimes.</s>METAXAS: You know, many people are concerned about the system outages that happen to many online brokers. You've chose -- you've selected Morgan Stanley Dean Witter, or at least the results are they were the best with system responsiveness. Overall, how does the industry do in that regard, and is that a problem for them going forward?</s>FREDERICK: It is always a problem. The problem with rating this kind of score is that we only test over about a two-month period, and it's rather informal. It's not a benchmark testing. So Morgan Stanley Dean Witter did well, because we experienced no problems. That's not to say that they won't experience problems in the future, or that these problems won't happen to any of these brokers. For a lot of them, outages are just problems waiting to happen. It could happen at any time.</s>METAXAS: We've talked about how the companies have changed. What about the type of investor who goes online as more people go online? How do the investors' needs change?</s>FREDERICK: Well, you're finding the second wave of investors. The first wave of investors, they came on a year ago, two years ago. They were really cybersavvy. They may have been a more active trader. They might have not cared so much about service and reliability. Now you're finding more a mainstream user, people who are accustomed to getting a customer service rep at their bank or their traditional brokerage in a matter of minutes. They're very -- they're more demanding, is what they are.</s>METAXAS: And you've chosen Merrill Lynch as the best in terms of products and tools. Is that a function of their being a full-service (inaudible), or they start coming from that end of the spectrum?</s>FREDERICK: Oh, absolutely. One of the parts of the products and tools scores was proprietary equity research. And Merrill Lynch's investment banking equity research department is one of the best i the world. And the -- you know, they -- you -- Henry Blodget, you know, you can read about what he has to say about Amazon.com any time you want as an online customer. Many of the other online brokerages, they have third party data feeds that you can get anywhere.</s>METAXAS: All right, Jim, we want to thank you for joining us. Jim Frederick of "Money" magazine. And for more on online brokerages, check out "Money" magazine's June issue, on stands now. Also find the broker that's right for you by using Money.com's interactive screening tool at www.money.com/broker. Well, turning now from best brokers to joint banking, June brides and grooms may be about to accept each other for better or worse, but bearing in mind that richer is always better than poorer, they should think carefully before saying "I do" to joint bank accounts. Bob Beard spells out the advantages and disadvantages.</s>BOB BEARD, CNN CORRESPONDENT (voice-over): Meta Schrenk and Mike Carr of Washington, D.C., are putting the finishing touches on their wedding plans. But they've already arranged one aspect of their future, a joint bank account. They opened it last year to simplify bill-paying when they moved in together, and soon found the set-up cost effective as well.</s>MIKE CARR, GROOM: You can do better if you put more money into an account. I mean, you have less fees you have to pay. You can get a better interest rate.</s>BEARD: Joint bank accounts have other advantages too.</s>NANCY POWELL, PRESIDENT AND CERTIFIED FINANCIAL PLANNER, POWELL CLEARY ASSOCIATES: If one of you gets sick or is out of town and bills need to be paid, there's access to the funds.</s>BEARD: Money earned during the marriage is generally considered both persons', no matter whose name you keep it in. However, the rules can be different for savings you had before the wedding.</s>POWELL: If you go into a marriage with some type of inheritance or money, and you commingle it, you are basically giving a gift of that money.</s>BEARD: While we here at CNN have nothing against wedding gifts, we are obligated to point out this potential downside. (on camera): For every two marriages each year, there is one divorce. If you commingle prior savings, you cannot necessarily take out the same amount of money you put in. The money could be subject to your individual divorce proceedings and state guidelines. (voice-over): You may also want to keep some money in a separate account for nonlegal reasons.</s>META SCHRENK, BRIDE: It just maintains a little feeling of independence that I'd like to keep.</s>BEARD: No matter which arrangement you choose, financial planners say make sure you communicate with your partner about your financial position and goals. That's YOUR MONEY. Bob Beard, CNN Financial News, Washington.</s>METAXAS: Up next on YOUR MONEY, blessed are the job seekers, for they shall inherit the works. Our next guest, Jeff Kaye, tells us why there's never been a better time to put yourself on the market. And high-speed Internet access at home, we'll tell you how to get on the fast track.