INVESTING_

					INVESTING:
Within an Online Community
Shannon Blankinship, Patrick Wargo, Matthew Wirt

Investing in today’s Society: For average American, the ability to acquire the necessary information to decide where to invest is limited. This limitation stems from the lack of overall knowledge in investment strategy. Investing can be a difficult process. The larger part of society has no expert knowledge of how to invest or what is the best type of investment for them. It takes years of training and trial and error for a person to know what investments will make them money, but most people don’t have the time to learn these steps, or the money to loose in trail and error. When investing for something like your child’s college savings or your own retirement fund, gambling in the stock market can cause severe penalties. Not many people have the extra money lying around to be able to take such risks, and this is why Investment Brokers exist. Brokers are trained investors that have the professional knowledge needed to properly place your money into the stock market to have it wreak profits for your specific needs. Most people who don’t use brokerage houses will invest through their banks, but may not know that the return from investing within their bank is a reduction from what a brokerage house can supply (fool.com ,2004). Exploring the Need for an Open Source Unification: Currently, if a person was interested in using a brokerage house for investing their money, they would have almost no where to begin as far as getting information. You can attempt researching on the internet, but if you don’t know what you want to invest in or what is best for your money and purposes, then reading various advertisements won’t do much help. It is important to talk with a broker, and be able to ask questions and get answers to guide them for where to begin (fool.com, 2004). The process from inquiry to actual profit is a long and arduous one. There is a need for a way to allow potential clients to speak with representatives from brokerage houses and be able to ask questions about investing, and receive answers fast. Where Bryght.com can facilitate: By using open source technology, clients may have the ability to access a webpage where they can find a comprehensive listing of investment terms that they may not know, along with a listing of different brokerage houses and directories. Along with the directory of companies and defining key investment terms, the site should also feature the ability for former, current, and potential clients to discuss various pro’s and con’s to investing with certain brokers. A large portion of potential clients trust word of mouth and television advertisements to comprise their knowledge of a company. This site should also include identifying many of the gray areas that new investors sometimes feel uneasy about, including brokerage house fees and explaining exactly where their money will be placed.

The site breaks down the difference between the many different types of broker services, from stock brokers to the full service brokers. It also shows in detail how each type of broker handles their clients’ money and what type of returns they may expect. Along with this information, prospects are able to locate local branches of larger investment firms and can go about setting up a meeting. Once this occurs, the main objective of the page becomes complete since the client has now located the broker that fits their needs and can meet their goals. Where do we find the Payoff: Since companies have the ability to gain clients from this free service, there will always be a supply of brokers willing to display their information. Since clients have the ability to gain reliable information about investing and investors, there will always be a demand for the information provided. Although a site with potential of this magnitude relies heavily on who is being represented throughout the site, the site itself can function merely as an advertisement of brokerage terms and listings if nothing else. Once potential clients understand the information that is being presented to them, there stands no reason for people not to reap the benefits.

Financial Advisor Comparison Table: Displayed below is a comparison of different ways financial advisors work for revenue which include: subscription based (e.g. the money advisor), fee-only financial advisor, fee-based financial advisor, and commission-based financial advisor. The aspects about each one are included and easily comparable to one another. A table like this within the website is a simple and easily understood representation of what helps potential clients decide where to invest.
Subscription-Based TMF Money Advisor Fee-Only Financial Advisor Find Your Advisor * Fee-Based Financial Advisor Find Your Advisor * Commission-Based Financial Advisor Find Your Advisor *

Learn More Typical Fees Cost $199 annual subscription (pro-rated, money-back gurarantee) $175/hour ** $175/hour ** or 1-2% commission/referral or commissions/referrals on products sold $175/hour ** or 1-2% commission/referral or commissions/referrals on products sold

Fee Structure

Flat annual fee

Flat hourly fee or flat fee for plan based on complexity

Hourly fee plus commissions Straight commissions on investments purchased based on investments through advisor (fees may purchased be reduced by size of commissions) Might pay annual maintenance fee or annual expenses on investments such as mutual funds, annuities, and insurance May receive a commission if clients follow recommendations Might pay annual maintenance fee or annual expenses on investments such as mutual funds, annuities, and insurance Advisors are paid commissions based on clients following their recommendations. Advisors might receive bigger commissions when selling the firm's own products

Ongoing Fees

None

Might pay annual maintenance fee

The AdviceCompensation Connection

Advisors do not receive any commission from the recommendations they make to their clients

Advisors do not receive any commission from the recommendations they make to their clients

Your Needs Investable Asset Requirements No minimum requirement Varies greatly, but may require a minimum portfolio worth $100,000 or more Varies greatly, but may require a minimum portfolio worth $100,000 or more Varies greatly, but may require a minimum portfolio worth $100,000 or more

Access to the Advisor

Phone, online planning tool, may Face-to-face email material to advisor. meetings, phone, Access to member-only, Foolperhaps email staffed discussion board

Face-to-face meetings, phone, perhaps email

Face-to-face meetings, phone, perhaps email

Products/Services Advice Will review debt level, emergency fund, asset allocation, retirement savings, major types of insurance, and estate planning May review budget, cash flow, debt level, emergency fund, asset allocation, retirement savings, major types of insurance, and estate planning Yes Perhaps Perhaps Will review investments and life insurance. May review other types of insurance, budget, cash flow, debt level, emergency fund, asset allocation, retirement savings, insurance, annuities, and estate planning Yes Perhaps Perhaps Will review investments — stocks, bonds, mutual funds, annuities — and life insurance. May review estate planning needs. Less likely to review other aspects of financial plan

Mutual fund recommendations Stock recommendations Can make investment decisions for you Will call to give updates and reminders Extras Education

Yes No No

Yes Perhaps Perhaps

No

Perhaps

Perhaps

Perhaps

Free access to all Motley Fool Depending on the online seminars and How-To advisor, may receive Guides. Monthly email newsletter monthly newsletter from Tom and David Gardner.

Depending on the advisor, may receive monthly newsletter

Depending on the advisor, may receive monthly newsletter

Broker Comparison Table The chart below is a broker comparison table illustrating the similarities and differences between four of the main brokerage houses. These brokerage houses are well known and include: Ameritrade, ShareBuilder, HARRISdirect, Brown Co, along with Fidel at the bottom of the other four. There are significant differences in these companies which suit multiple needs. There is no “best” company, but certain people require certain aspects out of their brokerage house and comparing these on this type of chart makes it that much easier.

Ameritrade

ShareBuilder

HARRISdirect

Brown|Co

Open Account More Info Account Minimum Information Cash Account Margin Account Retirement Account (IRA) Commission Schedule -- Online Trades Market Order $10.99 $2,000 $2,000 $1,000

Open Account More Info

Open Account More Info

Open Account More Info

No minimum N/A No minimum

No minimum $2,000 No minimum

$15,000 $15,000 $5,000

$4/ShareBuilder purchase transaction (made Tuesdays). $15.95 for Real-time market orders. $19.95

1-17: $19.95 18-59: $14.95 60+: $9.95

$5 (up to 5,000 shares) +$.01/share retroactive to the first share $10 (up to 5,000 shares) +$.01/share retroactive to the first share

Limit Order

$10.99

1-17: $19.95 18-59: $14.95 60+: $9.95

Commission Schedule -- Touchtone Phone Trades Market Order $14.99 N/A 1-17: $19.95 18-59: $14.95 60+: $9.95 $5 (up to 5,000 shares) +$.01/share retroactive to the first share $10 (up to 5,000 shares) +$.01/share retroactive to the first share

Limit Order

$14.99

N/A

1-17: $19.95 18-59: $14.95 60+: $9.95

Commission Schedule -- Broker Assisted Trades Market Order $24.99 N/A 1-17: $44.95 18-59: $39.95 60+: $34.95 $17 (up to 5,000 shares) +$.01/share retroactive to the first share $17 (up to 5,000 shares) +$.01/share retroactive to the first share

Limit Order

$29.99

N/A

1-17: $44.95 18-59: $39.95 60+: $34.95

Fee Schedule Maintenance Fees Transfer Fees $15/quarter $50.00 (Transfer Out Full non-IRA) $25.00 (Transfer Out None $10 per security ($50 maximum) $15/quarter $40.00 (outgoing) N/A $50 (full transfer out)

Partial or IRA) IRA Custodian Fees Extras Compatible with Quicken/MS Money ATM and Checking Local Offices Dividend Reinvestment Yes Yes No Yes More Info More Details No No No Yes More Info Yes Yes Yes Yes More Info Yes ATM (N) / Checking (Y) No No More Info None $25.00 $35.00 per acct per year N/A

d

The Fidelity Account: The Fidelity graph is an example of how investors currently attempt to educate potential clients on their website. The problem with this site, however, is that they are trying to teach you how much money you should be paying them, and not allowing you to compare to other brokerage houses. The advantage of the open source communications site is that you can compare and contrast with all different companies and decide for your won is they really have the long term goals that you are looking for.

1 Guidance provided by Fidelity is intended to be educational in nature. It is not individualized or intended to serve as the primary or sole basis for your investment or tax-planning decisions. A portfolio review is provided through the use of Fidelity Portfolio Planner: Portfolio Review. Portfolio Review is an educational tool developed by Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company, and by Fidelity Brokerage Services LLC, Member NYSE, SIPC.

Item Account Description Customer Profile Securities You Can Buy and Sell5

Description Discount brokerage non-retirement account with trading and cash management features. This account can be held individually or in a joint registration by investors 18 or over. • • • • • Stocks, Fixed Income, Options Over 4,500 Mutual Funds Exchange-Traded Funds IPOs6 UITs, Precious Metals, Foreign Securities7

Minimums, Fees, and Commissions

• Minimum to open account: $2,500 • $50 annual account maintenance fee may apply; waived for investors with $30,000 or more to invest, or if any of a number of other conditions are met. Additionally, an annual small balance fee of $12 may be deducted from each Fidelity mutual fund position you own with a value of less than $2,000 (your core account is exempt from this fee). Other fees may apply for special services or cash management features. • Online stock commissions as low as $8.00 in qualified accounts.4 See the Brokerage Commission and Fee Schedule for complete details.

Cards/Checking Explore all Cards/Checking features (Account minimums vary) • Transfer Money from your bank • Unlimited Checkwriting • Make purchases with the Fidelity American Express® Gold Card • Access your cash with an ATM/Debit Card • Fidelity BillPaySM – see a demo • Direct Deposit your paycheck • Margin Borrowing and Options • Line of Credit (AccessLine®)

Account Features

• Automatic Investment Service for mutual fund positions (Fidelity Automatic Account Builder®) • Electronic/Paper Mail Delivery - Receive your statements, confirms, and prospectuses online • Wire Money from your bank (Bank Wire) • Foreign Currency Wire Transfers • Customer Service – the forms you need to add and change Customer Service information on your account. Representatives • Portfolio – View account activity and place orders • 24-hour automated phone services. Call 1-800-544-5555 • Over 90 Investor Centers

Works Cited: Broker Comparison Table http://www.fool.com/dbc/tables/compare.htm?logvisit=y&source=eseggllnk403100&npu =y “Choosing A Broker” http://www.fool.com/dbc/dbc.htm Financial Advise Comparison Table http://www.fool.com/fa/finadvice06.htm?source=fa03 “Whom To Hire” http://www.fool.com/fa/finadvice03.htm?source=famp


				
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