Stock Preacher

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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Any Stock Broker Should be Registered

Any Stock Broker you deal with should be registered with National Association of Securities Dealers (NASD) and the Securities and Exchange Commission (SEC). In addition, to protect your money after you have deposited it into a brokerage account, that broker should be a member of the Securities Investor Protection Corporation (SIPC). SIPC doesn’t protect you form market losses; it protects your money in case the brokerage firm goes out of business. To find out whether the broker is resgistered with these organizations, contact the NASD, SEC, and SIPC.

The distinction between personal stockbrokers and institutional stockbrokers is important. Institutional brokers make money from institutions and companies through investment banking and securities placement fees (such as initial public offering and secondary offerings), advisory services, and other broker services. Personal stockbrokers generally offer the same services to individuals and small businesses.

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Online Stock Brokers Part 1: Broker Role

When you are ready to dive in and start investing in stocks, you first have to choose a broker. It’s kind of like buying a car: You can do all the research in the world and know exactly what kind of care you want to buy still, you need a venue to do the actual transaction. Similarly, when you want to buy penny stock, you task is to do all the research you can to select the company you want to invest in. Still you need a broker to actually buy the stock whether you buy over the phone or online.

The Broker’s Role

The broker’s primary role is to serve as the vehicle through which you either buy or sell stock. When I talk about broker. I am referring to organizations such as E-trade, interactive broker, Charles Schwa, Merrill Lynch, and many other organizations that can buy stock on your behalf. Broker can also be individuals who work for such firms. Although you can buy some stocks directly form the company that issue them, to purchase most stocks, you still need a broker.

Although the primary task of broker is the buying and selling of securities (keep in mind that the word securities refers to the world of financial or paper investments, and that stocks are only a small part of that world) such as stocks, they can perform other tasks for you, including the following:

Providing advisory services:

Investors pay broker a fee for investment advice. Customers also get access to the firm’s research.

Offering Limited banking services:

Brokers can offer features such as interest-bearing accounts check writing, direct deposit, and credit cards.

Brokering other securities:

Broker can also buy bonds, mutual funds, options, Exchange Trade Fund (ETFs), and other investment on your behalf.

Personal stockbrokers make their money from individual investors like you and me through various fees, including the following:

Brokerage commissions:

This fee is for buying and or selling stocks and other securities.

Margin interest charges:

This interest is charged to investors for borrowing against their brokerage account for investment purpose.

Service charges:

These charges are for performing administrative tasks and other functions. Brokers charge fees to investors for Individual Retirement Account (IRAs) and for mailing stock in certificate form.

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