Five signs it's time to switch online investment brokers

In some cases, making a change can save you money. In others, it might boost returns or give you access to elevated services, like stronger trading software, more investor education opportunities or a wider range of investment choices.

Paying account transfer fees, filling out online applications, learning a new trading platform: None of these qualify as an investor’s idea of a good time. And yet, jumping through these hoops to change online brokerage accounts can be well worth it.

In some cases, making a change can save you money. In others, it might boost returns or give you access to elevated services, like stronger trading software, more investor education opportunities or a wider range of investment choices.

Here are five signs it might be time to change your online broker:

1. You’re paying inactivity fees

Some online broker fees, like trade commissions, are unavoidable. Inactivity fees are not one of them.

If your broker is fining you for not trading enough or not maintaining a minimum balance, it’s time to jump ship. There are plenty of brokers that don’t have balance or trade requirements, including highly rated options such as TD Ameritrade and OptionsHouse. These brokers are better suited to casual investors who don’t want to commit to executing a certain number of trades per month, quarter or year.

2. You’ll make up transfer fees with reduced commissions

You’ll pay a fee to transfer your account, generally $50 to $75. But if the move will lower your trade commissions, it’s more than worth it.

Here’s where you need to do a little simple math: Divide the cost of the transfer fee by the per-trade savings. Let’s say you’re switching from a broker that charges $9.95 per trade to one that charges $4.95, saving you $5 per trade. Even if it costs $50 to make the account transfer, you’ll recoup that fee with just 10 trades.

If you don’t trade frequently, transferring your account may not be worth the cost. But be sure to explore broker promotions (more about these next). Some brokers, like Scottrade, offer to refund your transfer fees.

3. You can take advantage of a promotion

The online broker field is increasingly crowded and competitive. That means promotions are common, ranging from cash bonuses to commission-free trades to the aforementioned offers to subsidize transfer fees.

The catch: Often — though not always — you must deposit a certain amount to qualify. If you can pass that threshold and the promotion will either save you a significant amount in commissions or pad your account with a little extra cash, it may be worth a switch. Just be sure the new broker is a good fit for your needs. You don’t want to save a little in the short term if you’ll end up spending more or facing limited features over the long term.

4. You’re not managing your investments

Unless you’re invested in a target date fund that automatically rebalances, you need to be hands-on with your investment account. That doesn’t necessarily mean trading frequently, if that’s not your investing style, but it does mean checking in regularly to make sure your asset allocation is in line and your portfolio is tracking with the rest of the market.

If you’re not doing that, you might be better off moving your online brokerage account to a robo-advisor. A robo-advisor uses computer algorithms to manage your investments for you, for a management fee that runs around a quarter of a percent. You’ll also incur investment expenses, but these services mainly use low-cost exchange-traded funds. All told, you’ll likely pay less than 0.50% per year for the service, which is significantly less than a financial advisor would charge.

5. Your broker’s services don’t meet your needs

Some brokers charge rock bottom commissions but offer little in the way of investor support: limited or no educational offerings, minimal tools, no or poor trading platforms. Others charge a premium but provide services to match. TD Ameritrade, for instance, charges a high $9.95 per trade but gives investors access to some of the best trading platforms available, completely free.

If commissions are most important to you, your account should be with the former. If you need or want educational support, an upgraded trading platform and advanced tools, it may be worth a move to the latter, especially if those features improve your returns.

You don’t want to pay for services you’re not using, nor do you want a broker’s limited features to hold you back. Carefully consider your investing needs and choose the lowest-cost broker that meets them.

This article first appeared in NerdWallet.