Choosing Your First Broker: What to Look For
Not all brokers are the same. Here is how to pick one that fits your investing style without overpaying.
Don't have time? Here's what you need to know:
- 1Commission-free trading is standard — differentiate brokers by fractional shares, research, and automation
- 2Fidelity and Schwab lead for most beginners; Robinhood is simplest but has less depth
- 3Avoid brokers with maintenance fees, inactivity fees, or high transfer-out charges
- 4The best broker is the one that makes it easiest for you to invest consistently every month
The Four Things That Actually Matter
Commission-free ETF trading is standard now — every major broker offers it. So the real differentiators are fractional shares (can you invest $50 if a share costs $500?), research tools (screeners, analyst ratings, fund comparisons), automatic investing (scheduled recurring buys), and customer support (can you reach a human when you need one?).
If you plan to invest small amounts regularly, fractional shares are non-negotiable. Fidelity, Schwab, and Robinhood offer them. Vanguard does not for ETFs (only for their own mutual funds). If you value research, Fidelity and Schwab have the deepest screeners and educational content. If you want the simplest possible experience, Robinhood's interface has the lowest learning curve.
Broker Comparison for ETF Investors
Here is a practical breakdown based on what matters for ETF beginners. All of these brokers are SIPC-insured and offer free ETF trades. The differences show up in the details — account features, available account types, and the investing experience itself.
Check our detailed broker reviews for in-depth analysis. For most beginners, the right answer is whichever broker lets you automate monthly investments most easily. The broker that gets you investing consistently is better than the broker with the best screener you never use.
- Fidelity: Best overall — fractional shares, strong research, no minimums, banking features
- Schwab: Close second — excellent research, integrated banking, slightly older interface
- Vanguard: Ideal for hands-off investors buying Vanguard funds, but no fractional ETF shares
- Interactive Brokers: Best for global market access and international investors
- Robinhood: Simplest interface but limited research and customer support
Broker Red Flags to Watch For
Avoid any broker that charges commissions on ETF trades — there is no reason to pay in 2024. Watch out for account maintenance fees, inactivity fees, and transfer-out fees. Some brokers charge $50-75 to move your account elsewhere (called an ACAT fee). Fidelity and Schwab do not charge this.
Be wary of brokers that push proprietary products. Some platforms prominently feature their own high-fee funds while burying low-cost index ETFs. Your broker should make it equally easy to buy any ETF on the market. Also check if the broker offers tax-loss harvesting reports — this saves you time at tax season.
Important: Some discount brokers earn revenue by selling your order flow to market makers. This is legal and common (Robinhood does this), but it means your trades may get slightly worse prices than at brokers like Fidelity that route orders for best execution.
Want the full framework? This 2-hour ETF course teaches you exactly how to pick, buy, and hold profitable ETFs — from zero to confident investor. Under $15.
Frequently Asked Questions
Should I use the same broker as my bank?
Not necessarily. Bank-affiliated brokers (Chase, Bank of America's Merrill Edge) are convenient but may push their own products. Compare their ETF commission structure, fractional share support, and research tools against independent brokers like Fidelity before deciding.
Can I switch brokers later?
Yes. You can transfer your entire account to a new broker through an ACAT transfer, which usually takes 5-7 business days. Your investments move as-is — no need to sell and rebuy. Some brokers charge a $50-75 transfer fee, though the receiving broker sometimes reimburses it.
Does it matter which broker I use for a Roth IRA?
The investments inside the account matter more than the broker holding it. That said, pick a broker that offers fractional shares and automatic recurring investments for your IRA. Fidelity is the most popular choice for Roth IRAs due to zero minimums, fractional shares, and no fees.
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Alex Harrington
CFA Level II Candidate, Finance & Economics
Alex Harrington is an independent ETF researcher and personal finance writer with over 8 years of experience analyzing exchange-traded funds. A CFA Level II candidate with a background in economics, Alex has reviewed 800+ ETFs and helped thousands of beginners build their first investment portfolios through clear, jargon-free education.
This content is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.