In general, many of the largest wealth managers (Merrill Lynch, Morgan Stanley Smith Barney, UBS, Wells Fargo) choose to focus their business on having a financial advisor deliver advice to wealthy clients (generally $250,000+ in investable assets). However, they also allow their advisors to work with young investors through a “discount” online trading platform. But, since they are in business to make money, they have to make it profitable for them to have their advisor spend time with you and handle your accounts.

These larger brokerage firms charge a plethora of fees that discourage a financial advisor for working with clients that are not wealthy in order to make a profit of these small accounts. Annual fees can be charged to clients with less than $250,000 invested at up to $150 per account. Trading costs can be as high as a minimum of $95 per each trade if you traded with the financial advisor ($20 if you received no advice and used their online platform), and in some cases with an additional $5 on top of every trade as a “transaction fee”.

The lesson here is simple – choose a discount online broker to act as custodian for your investments. The time will come when your financial picture becomes much more complicated when children, homes, and much more money comes along…and then is the time when you can consider working with a professional to sort everything out. For the time being, you can read free educational material to set yourself up to have enough money in five to ten years when it makes sense to pay to work with a professional.

There are many companies that participate in the “discount online retail brokerage” industry (meaning firms that provide a cheap way for you to manage your money yourself online), including Charles Schwab, Fidelity Investments, and TD Ameritrade as the industry leaders. In the next sections we will break down what account types are available as well as some important information about each of these firms, and then you can choose a provider yourself.