Stock Preacher

Although full-service brokers, with their seemingly limitless assistance, can make life easy for an investor, you need to remember some important points to avoid problems:

Broker and account reps are still salespeople. No matter how well they treat you, they still compenated base on their ability to produce revenue for the brokerage firm. They generate commissions and fees form you behalf of the company ( In other words, they are paid to sell you thing)

Whenever you rep makes a suggestion or recommendation, be sure to ask why and request a complete answer that includes the reasoning behind the recommendation. A good advisor is able to clearly explain the reasoning behind every suggestion. If you don’t fully understand and agree with the advice, don’t take it

Working with a full-service broker cost more than working with a discount broker. Discount broker are paid simply for performing the act of buying and selling stocks for you. Full-service brokers do that and more. Additionally they provide advice and guidance. Because of that, full-service brokers are more expensive. Also most full-service brokers expect you to invest at least $5000 to $10000 just to open an account.

Some broker engages in an activity called churning. Churning is basically buying and selling stocks for the sole purpose of generating commissions. Churning is great for brokers but bad for customers. If your account shows a lot of activity, ask for justification. Commissions, especially by full-service brokers, can take a big bite out of your wealth, so don’t tolerate churning or other suspicious activity.

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Stockbrokers fall into two basic categories: full-service and discount. The type you choose really depends on what type of investor you are. In a nutshell, full-service broker are suitable for investors who need some guidance while discount broker are better for those investors who are sufficiently confident and knowledgeable about stock Investing to manage with minimal help.

Full Service Broker

Full-Service broker are just what the name indicates. They try to provide as many service as possible for investors who open accounts with them. When you open an account at a brokerage firm, a representative is assigned to your account. This representative is usually called an account executive, a registered rep, or a financial consultant by the brokerage firm. This person usually has a securities license and is knowledgeable about stocks in particular and investing in general.

What Full Service Stock Broker can do for you

Your account executive is responsible for assisting you, answering question about your account and the securities in your portfolios, and transacting your buy and sell orders, Here are some things that full-service broker can do for you:

Offer guidance and advice:

The greatest distinction between full-service brokers and discount brokers is the personal attention you receive form your account rep. You get to be on a first name basis with a full service broker, and you disclose much information about your finances and financial goals. The rep is there to make recommendations about stocks and funds that are hopefully suitable for you.

Provide access to research.

Full-service broker can give you access to their investment research department, which can give you in-dept information and analysis on a particular company. This information can be very valuable, but be aware of the pitfalls.

Help you achieve your investment objectives.

Beyond advice on specific investments, a good rep gets to know you and your investment goals and then offers advice and answers your questions about how specific investment and strategies can help you accomplish your wealth building goals.

Make investment decisions on your behalf.

Many investors don’t want to be bothered when it comes to investment decisions. Full-service brokers can actually make decisions for your account with your authorization. This service is fine , but be sure to require them to explain their choices for you.

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What to Beware on a Full Service Stock Broker

Although full-service brokers, with their seemingly limitless assistance, can make life easy for an investor, you need to remember some important points to avoid problems:

Broker and account reps are still salespeople. No matter how well they treat you, they still compenated base on their ability to produce revenue for the brokerage firm. They generate commissions and fees form you behalf of the company ( In other words, they are paid to sell you thing)

Whenever you rep makes a suggestion or recommendation, be sure to ask why and request a complete answer that includes the reasoning behind the recommendation. A good advisor is able to clearly explain the reasoning behind every suggestion. If you don’t fully understand and agree with the advice, don’t take it

Working with a full-service broker cost more than working with a discount broker. Discount broker are paid simply for performing the act of buying and selling stocks for you. Full-service brokers do that and more. Additionally they provide advice and guidance. Because of that, full-service brokers are more expensive. Also most full-service brokers expect you to invest at least $5000 to $10000 just to open an account.

Some broker engages in an activity called churning. Churning is basically buying and selling stocks for the sole purpose of generating commissions. Churning is great for brokers but bad for customers. If your account shows a lot of activity, ask for justification. Commissions, especially by full-service brokers, can take a big bite out of your wealth, so don’t tolerate churning or other suspicious activity.

Popularity: 1% [?]