Do you trust your broker?

I live in a European country where IRA accounts for personal investments are not a thing.

Hence, we basically rely on retail brokers for our investments.

Having picked out the low cost ones, I often ask myself the question if my invested capital is safe.

So therefore: Do you trust low cost brokers (In my case Degiro) ? What % of your capital do you hold with one broker?

First, they are idiots. Second, they have incentive to churn your account or put you in high fee products. Third, I am not sure where you live, but a country with no retirement account system might also not have strong fiduciary or anti fraud controls.

So, to anwer your question, no.

I’m talking about execution only brokers.

They provide the platform, you make the trades, they charge a small fixed fee.

Your assets are held with a custodian.

My country provides tax incentives for insurance based pension saving. Those vehicles invest in high free products so it’s a no go.

sell side traders?? salesmen who think they are the investment team with market moving powers with each keystroke

same with buy side execution traders.

Sounds more like robo or self-directed like a Scottrade account. If OP is using the term “broker” to mean a firm like Scottrade, then I’d say yes, it’s safe to have everything in one place. I don’t trust robo advising as much so I wouldn’t put all my eggs in one “broker” there.

You’re obviously not describing an old-school “broker” (no one really uses that term - in the US anyway - to describe advisors anymore). But, if you were, I’d say if you find one you really trust, yes, you should - in theory - put all your assets with one advisor. Ohai’s above statement is uncharacteristically wrong. If you go to a fee-based advisor, churning isn’t even possible. Nor do they receive any extra comp by selling more expensive products. In fact, RIAs in the US have to compete with one another and fees is where they win their business. That’s why the biggest RIAs generally use a mix of active and passive funds. They want to keep the total expense low so the RIA across the street can’t steal them away.

If this was 10 years ago, I’d completely agree with ohai. Churning was a big problem with the “stock-jock” brokers. And up until a couple years ago, many advisors (not RIAs though) would sell clients private REITs and BDCs that have huge sale loads. Those products are on life support though, and a pure RIA can’t even sell them anyway.

I would never trust a broker.

Stock, real estate, whatever.

They’re never acting in their clients’ best interest (unless it’s a coincidence).

I have money at different brokers (fidelity, interactivebrokers, etc) and I doubt they always engage in fair execution of trades you submit.

E.g. I bet they regularly execute market buy orders above the actual ask price. That’s why I use limit orders to protect myself.

I have a question about broker involvement. From the conversation here, I’m assuming the focus is on brokers that acts as a middle transaction. You put in the order, they see to execution. However, what about modern retail brokers like TD Ameritrade where you do your own execution? In products like futures where there is 100% transparency being that all transaction for that contract go through one exchange and all order flow is visible to anyone. When you place an order, it just gets mixed into the order flow at the CME or whatever. What role does the broker play in that situation. They just hook up the market access but have no direct interaction with the order?

In general, Im curious about retail broker interaction (IB or TD for example) with the orders placed through them. What role do they play in getting your “buy” to find seller in different kinds of products?

You’re right, I might have misused the term broker here. I’m really talking about online execution-only platforms like TD Ameritrade. (Don’t work with them but I guess that’s what they do?)

Then it really doesn’t matter. The primary benefit of having all your money with one broker is if you can lower costs by reaching a certain breakpoint. For example, if your broker offered 10 free trades a month if you have over $100k with them. Another benefit is the ease of seeing all your positions in one place. Though this can be easily replicated using any number of other websites or even just a spreadsheet. The major downside is if your broker goes out of business. Not sure what kind of protection your government provides you, so you should look into that and think about spreading your money around if you’re over the maximum insured limit at one place.

don’t worry about it then. your orders are probably bought and sold before it “execute” thanks to HFT firms… so who is the real broker now? in the end it does not matter. happy tradin’!