Money Guide Reasons to Use a Full Service Broker Great Ideas Collection
Borrowing
Contrary to what most people think, full service brokerage firms (also known as financial services firms) are in the business of saving you time, not making you rich: only a small percentage of brokers manage to earn more for their clients than the market on average. Rather, a full service broker's full-time immersion in the world of investing can be a useful source of ideas for people who are unsure about investing and do not have the time or inclination to learn about and follow the stock, bond, and future markets.

There are two types of relationships with full-service brokers:
  • Discretionary Accounts - In these, the broker can execute trades on your behalf without first asking for your approval. This situation is ripe for abuse, especially if you pay commissions on each trade. The most responsible financial services firms discourage such relationships. You should be wary of them also.
  • Non-Discretionary Accounts - In these, the broker must obtain your advance approval (or that of a third party to whom you have granted power of attorney, such as a family member) for every transaction, usually by phone. This is a wiser approach. It also gets you involved in the decision-making process, thereby increasing your investment knowledge.


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Topic contents Mark Kolakowski and CliqueFriends, LLC, 2004
Saving/Banking
Investing
Discount Brokers
Full Service Brokers
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Taxes