- Posted July 27, 2014 by
Which one: Discount or Full Service Broker?
CEO | I.B. Capital Management
Investment in stock market is your first step in this huge industry. You can't to buy any stocks, bonds or other alternative fixed income funds without any stock broker. Find a right stock broker without any hidden fees who will be honest person it's too hard today. Today i'm oriented on US market that is global and world's top market for me as individual investor at NYSE, Nasdaq, while i think in America everything is possible especially in stock exchange market. To analyze how to find a right stock broker you must find more information about his background. Here isn't important what university or college did he graduate, while you don't need any degree to become a stockbroker or find a best niche of stock brokers. Even most of stock brokers worldwide are person who had only college or some of them don't have any college degree. So first of all you must separate discount and full service broker from each other.
Who is full-service broker?!
The full-service category includes all the names that spring to mind when we think of brokers: Merrill Lynch, Salomon Smith Barney, Morgan Stanley Dean Witter and others. They provide a variety of services, such as personal advice, retirement planning and tax tips. Full-service brokers offer a wider selection of investment products such as derivatives and insurance, as well as access to the company's research. All this comes with a hefty price tag. Full-service brokerages are expensive, with commissions around $150. Furthermore, full-service brokers are compensated based on how much you trade, not the performance of your portfolio. This can lead to your full-service broker advising you to trade when you don't need to. When this becomes excessive, it is called churning.
Who is Discount Broker?
Discount brokerages charge a reduced commission and do not provide investment advice. The best-known discount brokers are Charles Schwab and TD Waterhouse. Fees are kept low because discount brokers offer fewer products. Brokers are paid on salary and not on commission. The business model is built on having an effective system and quality service in order to put through the most volume.
Today discount stock brokers has it's minimum and cheap commission and this is a main reason of their competition.
Honestly i prefer to hire full-service broker, while it's more safe for me, especially Morgan Stanley Smith Barney. But people who invests seldom and they aren't oriented on capital growth it's better to open their discount brokerage account that is very easy after several document sent and processing complete.
Totally maybe you have only one question: Discount Brokers or Full-Service Brokers: Which is Right For Me?
I can ask of your questions shortly:
1) Discount brokers provide trading executions at rock-bottom prices. That is the key benefit they offer.
Discount brokers do not offer the same level of customer service or the same number of products that full-service brokers do, but discount brokers do offer all of the tools and services you need to place trades as an individual investor. If you feel comfortable conducting your own stock analysis and placing your own trades, you may want to consider using a discount broker.
2) Full-service stock brokers, as their name suggests, provide a full range of products and services to their clients. Typically when you are working with a full-service broker, you will work with an individual who personally oversees your account and is responsible for taking care of your needs.
A full-service broker can provide services, such as:
- Trade execution
- Stock selection advice
- Retirement advice
- In return for providing extensive, hands-on service, a full-service broker typically charges higher commissions.
Now that you’ve got the basics of what a full-service and discount broker is and you can to choose which one is better for your money and for your investment. But be carefully, always analyze before investing! Money never sleeps only when it' not in our pocket.