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Stock Broker Categories

With the expansion of the Internet, many new services and possibilities were introduced. Additionally, Internet provided vast amounts of information to which most individual investors have a free access. As a result not only the amount of information available to investors has increased, but also the range of brokers from which investors can choose.

There are several major types of stock brokers you can choose from:

  1. Full Service Stock Brokers

    If you need recommendations on the type of stocks you should choose to meet your financial goals, you should use the services of full service brokers. When you meet with him/her the first thing s/he will do is to evaluate your current financial situation. Then your goals will be specified in order to fit both your financial condition and needs with the appropriate type of investments.

    The final step is an investment plan. This plan is periodically reviewed in order the necessary adjustments to be done that are called by the dynamics of the market and the changes in your lifestyle.

  2. Money Managers

    If you have a large amount of money, but you lack the time to invest them you can give them to a money manager, who will do the investing instead of you. S/he takes full charge and management of your money in return to a percentage of the managed assets. The services of such money managers may come to a great price, but most of the time it is worth making such an expense.

  3. Discount Brokers

    There were times when you could hardly find other type of broker but a full service one. Their commission fees were quite high and they almost exclusively controlled the market. However, full service brokers were quickly removed by discount brokers with their lower commission fees.

    Often referred to as order taker, discount/online brokers take the orders you have by the phone or online. Don't expect long conversations over the phone and, what's more, discount brokers will assist you only if you have any technical order problems. Furthermore, discount/online brokers don't provide stock picking advices or any other investing tips.

  4. Discount/Online with Assistance Broker

    This type of brokers offer their customers a wide database of researches and some of them even provide newsletters that give investing advices and news from the field. If you sign with this variation of brokers you will stay play an active role in the investment dealings while you enjoy some of the characteristics of full service brokers.

Final Piece of Advice

Even if you are confident in your knowledge or possibilities, sometimes it is better to take advantage of a broker to execute the investments you want to make in the stock market. When selecting a broker that will help you with your investment dealings make sure that s/he is covered by the Securities Investor Protection Corporation (SIPC) so that you will have some insurance against firm or individual broker failure. Also, since technology is susceptible to break downs you should check whether your broker has a backup system.

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