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What are the types of Brokerage Firms?
Home » Investing » Selecting a Brokerage Firm » What are the types of Brokerage Firms?A Brokerage Firm may be a huge corporation with hundreds of brokers, or a small company with only one broker or any size in between. A Brokerage Firm could also be classified from full-service to a discount firm. It’s important to learn the difference.
• A full-service Brokerage Firm:
o Goes over your financial situation in some detail.
o Is used when you don't have the time to manage your own account and do the necessary research.
o Does the research on a particular stock for you.
o Analyzes stock market trends and performance.
o Provides a wide range of financial services, including financial planning, asset management, and educational programs.
o Provides useful tax advice.
o Actively manages and builds up your account—anything from conservative to aggressive growth.
o Usually is a larger firm.
o Charges high fees and commissions--the biggest disadvantage.
• A discount firm:
o Won’t help you pick a stock or tell you when to sell. You are on your own.
o Setting up accounts is far less personal.
o May provide some investment information on their websites.
o Could be an online broker, encouraging customers to trade electronically.
o Has fewer financial services.
o Charges much lower commissions and fees.
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