Bob Brinker's Marketimer

  Tuesday November 21, 2017

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WHICH BROKER DO I USE?
Learn even more about this topic with the Encyclopedia of Personal Finance™

Besides buying and selling securities for customers, brokers may provide other services such as doing market research. Most people do not have the time or resources to adequately research companies they consider for investment. The broker can be of assistance. With vast resources, brokers can provide investors with the "market intelligence" to allow them to make wise investment decisions. Other people prefer to do it themselves.

Full-service brokers research investments and assist their clients with their investment decisions. For this service, commissions compensate them on the transactions. Full-service commissions are higher than commissions to brokers who do not provide research services.

Discount brokers simply execute your trades. They typically do not provide many other services. Discount brokers are compensated with commissions on transactions. Their commissions typically are lower than those of full-service brokers.

Deep-discount brokers execute trades only. Because their customers trade in large quantities regularly, they are able to charge the lowest commissions.

Until recently, the divisions between these three services were fairly clear and obvious. However, the growth of the Internet has changed the rules. What has changed? That is the subject of the next screen.




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