Full Service and Discount Brokers and Services Offered

A stockbroker is a professional who trades securities and charges a commission or fee. The commission depends on the value and size of the trade and the experience and reputation of the broker.

Stockbrokers build a customer base by advertising in newspapers, magazines, and online. They often work overtime because the stock market changes quickly. Thus they should follow market trends and research stocks all the time. It is the task of brokers to act as intermediaries between sellers and buyers of financial derivatives and stocks.

Broker Types

Investors can use the services of two types of brokers – discount and full service brokers. Experienced investors often hire non-advisory or discount brokers who buy and sell stock. This is a good choice for those who don’t need professional advice. These professionals advertise lower fees than full-service brokers. Unlike them, traditional brokerage firms offer investment advice and trade securities on behalf of clients. They look at the goals and investment strategies of clients and offer a wide array of services. These include tax planning tips, estate and retirement planning, research, and a lot more. Traditional brokerage firms are a good choice for novice investors and those who don’t have experience in dealing with complicated issues.

The broker assesses the client’s financial situation and chooses investment products and a strategy. The first step is to determine the long- and short-term goals of the client, whether it is debt repayment, starting a new business, or expanding business operations. Some people want to transfer wealth to minors and dependents while others seek to establish a legacy. People invest to create a retirement plan and save for their children’s tuition, house, or major purchases. Stockbrokers develop investment strategies based on financial goals and risk tolerance. They specialize in foreign securities, annuities, unit investment trusts, and initial public offerings. They also trade exchange-traded funds, mutual funds, bonds, and stocks.

A full-service broker will examine the client’s current liabilities and assets as well as his future income and expenses. The broker will look at income sources such as wages and salaries, inheritance, employee achievement awards, and child support payments. Other sources of income include health savings accounts, sick pay benefits, and deferred payments. The broker also looks at the client’s future expenses, including mortgage payments, credit card debt, parental care, and college tuition. Clients decide on whether to get involved in choosing securities, monitoring the investment portfolio, and developing a strategy. Some clients need more guidance while others seek advice on certain issues.

Clients should present information and documents such as addresses, birth dates, and names of beneficiaries and joint account owners, monthly statements for their investment accounts, and recent tax records.

Full-service brokers invest in hedge and private equity funds and offer tax preparation and retirement planning advice. When choosing a stockbroker, it pays to ask about the services offered, their customer base, and how often they review and adjust investment portfolios.

Investing in a dividend reinvestment or direct stock purchase plan is one alternative to using the services of a discount broker or traditional brokerage firm. If you choose this option, you will receive quarterly statements with information about splits, stocks, sales, and reinvested dividends. Basically, a DSSP is a service that makes it possible to buy company stock through a transfer agent or directly. This option is a good choice for people who want to save on fees and commissions. Investors should make a deposit in the amount of $100 to $500. Finally, those who want to diversify their investment portfolio may look into exchange-traded funds.

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