Stockbroker Tips
- Stockbrokers are salespeople who act as intermediaries between consumers and the stock market. They typically work for some combination of commission and salary. All stockbrokers have to pass tests to become fully licensed. To buy or sell stock, you just contact your stockbroker and authorize the trade. They take care of the rest.
- The brokerage houses where stockbrokers work fall into one of two categories: Full-service or discount. Full-service brokers are typically more expensive. They offer customized service and numerous financial products (such as stocks, bonds, options and futures). Because they typically work for commission, the more you trade, the more they make. Often, they can provide high-quality advice and counsel, a service some customers think is worth the additional cost.
Discount brokers typically do not give advice to their customers. Instead, discount brokers focus on offering the lowest possible price for each trade. Many of them offer Internet-based transactions that can maximize trade volume and minimize overhead costs. Stockbrokers at discount brokerages earn salaries, so there is no incentive for them to have high trade volume by their clients. - Investors who want the peace of mind that comes from having an experienced professional handle their financial dealings should choose a full-service broker. Most transactions can be initiated by a quick phone call to your personal representative at the brokerage, who can give specific advice in tricky situations. Of course, that advice is not guaranteed to be correct.
Investors who want to make their own decisions at the lowest possible cost should choose a discount broker. These services are highly competitive, so you will have to compare the exact services and prices of each one to determine which is best for you. For example, if you plan on day-trading (buying and selling stocks within the course of one day), you will want a service that has a lightning-fast connection and discount prices for customers who make numerous trades. - Both full-service and discount brokers offer their clients the option of trading online or by phone. How developed each process is depends on the individual company.
With a full-service broker, a quick phone call puts you in instant contact with your personal representative, who will already know your name and stock portfolio.
The discount brokerage's phone representatives will not be familiar with you or your holdings. Discount brokerages usually offer highly developed online trading utilities that allow you to view price histories, research company data and stream live stock market activity directly to your computer or handheld device.