Wait! I think I can see a queue of confused faces out there who are bewildered about whether to choose a full-service brokerage house or a discount brokerage firm. Honestly speaking, I was one of you guys almost 10 years ago. Utterly confused, clueless, demented was I when the time had come to choose between a full-service and a discount brokerage firm. That’s why I believe, it is wiser to know and understand all the options before choosing a specific type of investment for opening an account. Now, you may ask how I managed to bring out myself from such state of mind. I did A vigorous research work, read many journals, asked for tips and advice from my friends and acquaintances who had been into the stock broking for many years. One thing that helped me the most to take the final decision was to know the differences between a full-service brokerage and a discount brokerage firm. Here, I will share the differences with you all with the hope that it will come to your rescue as well.
Full-service Brokers
As the name suggests, full-service brokerage firms are they who offer a 360-degree financial service, starting from share trading to insurance brokerage, mutual funds to portfolio management service. Their services also include personalized financial advice, retirement plan, and tax tips. Usually, the full-service brokerage category includes all the top names in the industry who do not restrict themselves from sharing the high-end research reports with their clients like fundamental research, technical research and quaint updates in order to generate a consistent risk-adjusted return against the investments of the clients. They advise to trade when needed and they advise not to trade when not needed. Needless to say, because of such a wide variety of services, they usually charge a high amount of brokerage fees.
Discount Brokers
Discount brokers, on the other hand, are those who usually do not offer a wide range of financial instruments like the full-service brokerage firms. They primarily target the average investors with limited investment options and affordable charges. They charge a reduced commission and do not offer personalized investment advice and research reports. In other words, they offer ‘no frills brokerage service’ for ‘do it yourself’ traders who understand the market well and do not depend on advisory service. Discount brokers are the new breed of brokers that offer technologically advanced service at extremely cheap online brokerage services.
Now when you know the differences between full-service brokerage firms and discount brokers, I am sure it will be easier for you to make your choice. If you are a beginner and do not want to go for an expensive broker than a discount brokerage is at your choice or else you can opt for a full-service broker who will certainly help you for making a successful investment in every possible way. So, wish you all the luck for your choice!
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