The first indication that I got that Rob was starting his Roth I.R.A. was his frantic phone message asking me to review a number of rights and responsibilities documents provided by Fidelity Investments. He took this plunge into Fidelity Investments after finding out that he was not required to keep a portion of his retirement savings in the program established by his job. I didn't question his decision to strike up a 45+ year relationship with Fidelity. I simply reviewed what looked to be standard investment notification documents and said go for it.

Though this was a seemingly quick and easy decision for Rob, picking an investment firm can be complicated. I believe that based on how complicated managing finances can be for some people. However, for Rob I don't think this is the case. He doesn't need in-person advice about taxes, annuities, tax shelters, asset management, daily stock trading or other financial services yet. Therefore Fidelity's online advice will serve him well while he builds his nest egg. I do believe that he will ease into the full compliment of services offered by Fidelity as his assets grow and he starts making decisions about home purchases, kids and other more complicated financial deals.

Another positive aspect of Rob’s decision can be found in J.D. Power and Associates customer satisfaction surveys. In the 2006 survey of online and full-service investment firms Fidelity Investments, Charles Schwab, and Vanguard scored above average. It appears from the ratings that Rob’s decision to go with Fidelity Investments is better than most. I think Rob will be satisfied with Fidelity based on their comprehensive web site.

I started my Roth with Charles Schwab over 8 years ago and have taken advantage of the development of their web site. Charles Schwab was a strong contender for my business based on their relatively large universe of high performing mutual funds that were no-load and that they did not have a commission on their purchase and sale. The same is still true today. For people that haven't made a decision on where they should start their Roth's, I suggest looking at Charles Schwab's site. At the top of the home page is a link to “How to Choose a Firm”. I reviewed the options that an individual should consider. It seems to be straightforward, good advice without many marketing devices. However, if I was Rob and just starting a Roth I might get overwhelmed with all that Charles Schwab suggests that one should consider. If you look at what the cost is to make simple mutual fund trades or infrequent stock purchases, you can easily compare investment firms. I wouldn't get too caught up with all of the services that they can provide at this time. As your assets grow you may chose to utilize the fee-based advice and products available from full-service investment firms.

I would caution people new to managing retirement funds from using a strictly online investment firm such as Scottrade or E*Trade. Though they have enticingly low trade costs and the ability to offer Roth I.R.A.s, my experience has been that they don't provide enough research options and mutual fund "screeners". These types of tools are very comprehensive at Fidelity and Charles Schwab. The online investment firms are generally targeting individuals that are making frequent stock trades. The risk involved with making multiple trades in a short period of time is not generally suggested for new investors, especially when it is retirement funds that are at stake.

In my next post I will explore the availability of purchasing socially conscious mutual funds through Charles Schwab and Fidelity Investments and also review any progressive environmental and social principles they may have.