How to Ditch Your Financial Advisor and Do it Yourself

While Benzinga mostly covers actionable trading ideas and news stories, we've decided to delve a bit deeper into personal finance. The team at Benzinga would like to assist readers with not just their investing endeavors, but their financial lives as a whole. And today, we continue this effort with how to ditch your financial advisor and do it yourself.

Many “financial advisors” are glorified salesmen. That's because most are commission-based or fee-based (paid by fees and commissions). Those commissions are shared with the firms they work with, such as Morgan Stanley MS and Goldman Sachs GS, giving the advisor and company incentive to maximize trading volume. That often leaves you paying more than you should – or becoming a “Muppet” as former Goldman Sachs employee Greg Smith would say.

Related: Goldman Sachs' Psychopathic Culture Under Blankfein Confirmed by Greg Smith?

That said, you can avoid most conflicts of interest by choosing a fee-only advisor. However, those are the minority and, even if you find a good one, you'll still pay handsomely for that honest advice.

How can you ditch your financial advisor and do it yourself?

Use an Online Broker

Fortunately, among its many wonders, the Internet has made trading possible while wearing slippers in your living room. Online brokers allow investors to bypass traditional financial advisors and make trades directly from their computers. They're usually significantly cheaper, as well, given their lower overhead and the fact they typically don't offer any investment advice.

Which Online Broker is Best for You?

If you're looking for a cheap, no-frills experience, go with an online broker such as Just2Trade or Optionshouse. The former charges a very-low $2.50 per trade. The latter charges a bit more at $3.95 per trade, but offers a lower starting point with a $1,000 minimum versus $2,500 with Just2Trade.

If you want the works, try E*TRADE ETFC. Unlike most online brokers, it offers personalized investment advice. And, it offers high-quality education and tools, which are great if you intend to trade frequently. Those bells and whistles come at a price, as the platform charges $9.99 per trade (plus $25 for broker-assisted trades).

Scottrade is another option if you desire a high-end experience, but doesn't offer investment advice. However, if you're confident in your investing abilities, it offers a plethora of information and tools at a lower cost than E*Trade. Both E*TRADE and Scottrade require a $500 minimum, which shouldn't be a problem if you have enough money to invest in the first place.

There are numerous other online brokers including Fidelity, TD Ameritrade AMTD, Schwab SCHW, TradeKing, TradeStation and more. Find the one that works best for your budget and investment abilities.

Final Word

Online brokers are your ticket to freedom from the high fees and conflicts of interest of your financial advisor. However, you should invest a small amount at first until you're more comfortable with the market. Gradually build wealth as you move further and further from ever needing a financial advisor again!