Full-Service Brokers - Should You or Shouldn't You?

Full-service brokers - should you or shouldn't you? This is a question that must have been on your mind for a few days now as you contemplate about making investments through brokers. The costs must be weighed against the benefits of these full-service brokers in comparison with their discount counterparts. In the end, your choice between these two types of brokers partly determines your success as an investor.

Let's discuss the costs first of hiring full-service brokers. The costs vary from one brokerage firm to the next but all of the fees, commissions and other charges on your investment account are on the high end. Keep in mind that the services are directed at big-time investors with hundreds of thousands, if not several millions, of dollars worth in investment portfolios.

For example, where discount houses will charge $7.99 per trade, full-service brokers will charge $100 for a similar transaction. The minimum amount to open a brokerage account is also higher in comparison with discount brokers, say, $5,000 as against $500. The charges on inactive accounts as well as on accounts falling below the minimum balance are also higher.

The good news is that with the higher costs come a greater number of benefits. The question of "full-service brokers - should you or shouldn't you?" will be swayed toward the affirmative when you consider these benefits:

• Expertise of the professional stockbroker in planning, managing and building your investment portfolio. This is personalized service at its best.
• Invaluable advice on the best investment picks in the market. In many instances, your full-service stockbroker may have insider tips useful in gaining a lead over the pack.
• Opportunities to expand the investment portfolio. You will be taught about the other possible investments aside from stocks like mutual funds, hedge funds and commodity futures. Yes, these forms of investments are imbued with higher risks but the benefit of profits are higher, too, if and when you play your cards right. Your stockbroker will be of great assistance in this matter.
• Access to reliable research, live streaming quotes and other valuable information essential to making the right decisions for the investment portfolio
• Access to other important services like retirement planning and tax strategies. Take note that taxes will lessen your investments' net worth.

In contrast, a discount broker will only execute the trades ordered by their clients - no more, no less. The services provided for are not personalized in anyway to the needs, wants and goals of the client. In fact, your orders will be entertained by the first available broker on the line instead of the firm assigning a single broker to handle your account.

You must then make your own decisions, do the research and manage your account all by yourself. This arrangement can be to your benefit if and when you know how the stock market works and how to play the game for your own gains. If not, then you can watch your money going down the drain.

Full-service brokers - should you or shouldn't you? Well, we suggest looking at your investment needs, wants and goals. If you are not confident about swimming in the stock market with your wealth on the line, so to speak, then we suggest going for the full-service broker.