| When looking at a full-service broker, you will need to | | | | for most services, including: research, |
| decide between a commission-based or a fee-based. | | | | recommendations, trades and other financial services. |
| Which is right for you? | | | | The fee and the services will vary from firm to firm. |
| What type of stockbroker you should choose | | | | Usually, the client is charged a percentage of his or |
| depends entirely on how you invest and your needs | | | | her assets under management. This percentage is on |
| for service. There are two broad categories of | | | | a sliding scale depending on the size of the account. |
| brokers: full-service and discount brokers. There are | | | | The more assets you have, the lower the |
| also many types of brokers that fall in-between the | | | | percentage you are charged. Most brokers bill client |
| two distinctions. | | | | accounts on a quarterly basis. |
| Discount brokers usually process your order at a low | | | | Investors that will use the research and |
| cost. They don't do anything but process your | | | | recommendations of the brokerage often benefit |
| orders. If you don't need advice, research or other | | | | from the full-service broker. Those that trade quite |
| services, this is a good option for your trading needs. | | | | frequently and use the services regularly may benefit |
| However, if you do want all the extras -- and will use | | | | from a fee-based broker. One flat-fee will cover |
| them -- a full-service broker may be the better | | | | everything. The investor doesn't have to worry |
| choice. There are two types of full-service brokers: | | | | about the cost of each individual trade or the use of |
| commission-based and fee-based. And as with | | | | each service. |
| everything else, there are some brokers that | | | | Keep in mind that different brokers do not offer the |
| combine the two types of services into a hybrid | | | | same tools, research and perks to their customers. |
| arrangement. | | | | Some feature great Internet perks -- allowing you to |
| The difference in cost between a discount broker | | | | log on and print out an analysis of your portfolio, |
| and a commission-based, full-service broker can be | | | | view your account balances and check your gains. |
| significant. In fact, the prices can quite different even | | | | Others won't offer all the online features, but have |
| between two firms of the same kind. For example, | | | | excellent research that isn't found elsewhere. Make |
| one discount brokerage may charge $30 per trade, | | | | sure you check out the execution time on trades. |
| while another charges $5. Remember, you usually get | | | | Before you open an account, look at all of your |
| what you pay for. The higher price usually means | | | | options. If you are a heavy trader who likes all the |
| faster execution and better service. Shop around | | | | extras, a fee-based trader may be right for you. |
| wisely and compare many different brokerage firms | | | | Shop around and consider all of your options before |
| before you open an account. | | | | you decide. |
| Fee-based brokers charge their customers a flat fee | | | | |