I'm No Longer Happy With My Brokerage Account. What Are My Options?

Some people open their first brokerage account and stick with it for a while. But in time, you may come to realize you didn’t choose the best account in the first place.

Perhaps your brokerage account isn’t the most user-friendly. Or maybe there are fees that exist in your brokerage account, like an inactivity fee, that you can get out of paying elsewhere.

Also, while many brokerage accounts today allow you to invest in fractional shares so you don’t always have to commit to purchases of whole shares, some don’t. If yours is in the latter camp, you may want to move over to a brokerage account that offers fractional shares, as that could lead to better diversification in your portfolio.

Read more: unlock best-in-class perks with one of these brokerage accounts

If you’re not happy with your brokerage account, it pays to explore your alternatives. But here are two other moves you may want to consider as well.

1. Open an IRA

An IRA actually gives you less flexibility than a traditional brokerage account because there are annual contribution limits to stick to and rules to follow regarding withdrawals. With a regular brokerage account, you can save and invest as much money as you can afford any given year.

This year, IRAs max out at $7,000 for savers under 50 and $8,000 for those 50 and over. However, traditional IRAs serve the important purpose of exempting some of your income from taxes, since the money you contribute up to the aforementioned limits goes in tax free.

Also, you’re not taxed on investment gains in an IRA every year the way you are in a regular brokerage account. Rather, those gains are only taxed at the time you take withdrawals from your account, which should generally happen in retirement.

IRAs impose penalties for withdrawals taken prior to age 59 1/2 with a few exceptions. But an IRA could still be a smart move if you want access to a range of investment choices with limited fees.

2. Talk to a financial advisor and see what brokerage they recommend

Financial advisors are in the business of investing. It’s a good idea to talk to a financial advisor to ensure you’re on track to meet your long-term financial goals.

But while you’re having that conversation, why not solicit advice on a brokerage account to replace the one you currently have? Chances are, your advisor will have some good recommendations.

Of course, one option you have is turn your portfolio over to a financial advisor and have them manage it on a long-term basis. Doing so will cost you something — often, that fee is 1% of the amount of assets under your advisor’s watch. So if you have a $50,000 portfolio, you might pay $500 a year for that service.

However, it could be worth it, because from there, it will be the job of your financial advisor to monitor your accounts and add and remove assets as appropriate. And that way, you won’t have to be the one to navigate a new investing platform.

You shouldn’t settle for a brokerage account that’s tough to use, high on fees, and just plain not designed to meet your needs as an investor. Instead, explore alternatives and consider an IRA for the tax breaks involved.

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