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Getting Started: Questions to Ask On-Line Brokers

For investors who are thinking of opening on-line accounts for trading stocks, here are some basic tips and some questions to ask brokers.

There are hundreds, if not thousands, of on-line brokerages. Fees typically range from $7.95 to $29.95 per trade, with a corresponding amount of information and service.

The first question to ask yourself is ''How much service do I want?'' Forrester Research Inc. foresees three models emerging for on-line brokerages:

The bare-bones brokerage, which offers the cheapest prices - less than $10 a trade - but which offers limited access to research and little or no personal service.

The mid-range brokerage, which charges moderately higher prices but offers customers access to more information and research, along with the possibility of personal counseling and investment advice.

The top-end brokerage, with professional brokers who personally offer individual advice and attention, including financial planning. Customers can still take advantage of the control, speed and flexibility that come with on-line trading.

Look at the fee structure to make sure it is a good fit with your personal trading patterns. Are there discounts for larger trades? Does it cost more to place limit, stop or other specialized orders? Do you get additional service for maintaining a minimum level of assets in your account?

What happens if a trade does not go through? Is technical support available? Is there a toll-free telephone number for immediate assistance?

Internet stock sites and chat rooms are full of advice, often of dubious origin. How much research is available from the brokerage? Will you want personal advice from brokers or financial advisers?

Web browser access is fine, but you may want to keep other records or be able to trade when your computer is not available. Do you receive regular monthly written statements about your trades and portfolio?

Some brokerages now offer their retail clients access to initial public offerings of stock. If you are interested in IPOs, ask the broker whether it offers such access and whether it is restricted to clients with certain asset levels.

Don't be too eager to begin making trades. Some firms allow novice investors to buy shares even before they send in money. Don't do it, because you'll be committed to that firm, and it may not be the right firm for you. Instead, both before and after you open an account, spend some time making practice trades - something that many on-line firms allow would-be clients to do.

Most trading firms will offer the possibility of trading ''on margin,'' with money borrowed from the brokerage. But you must pay interest on the money you borrow, and if your investments go down rather than up, the firm may issue a ''margin call'' that requires you to immediately either send in more cash or sell some of your stocks.

Web resources for researching brokerages include The Motley Fool Inc. (http://www.fool.com) and Gomez Advisers Inc. (http://www.gomezadvisors.com). These and other sites also have links to research on stocks and funds.

Tim Harper