Stock brokers are agents of financial institutes such as brokerage firm who on behalf of his/her clients trade the stocks and securities of the client. The stocks are mutual funds and bonds. There are many types of stock brokers who are experts in investing. Anything about investment is what they do. They know all about stock exchanges and hold up to date informations about shares. The service of one type of a stock broker is different from the other. They are broadly classified as follows.
Full service brokers:
The costliest of all brokers is full service broker. As the name says, a full service broker provides you all the services required to make an investment decision. The broker does all the research and gives you the recommendations about making your investment. Now you know why they are paid the highest.
In a full service firm you will b assigned a personal broker. The broker first studies you financially and makes conclusions of which investment would be suitable for you. He recognizes your needs and comes up with an investment plan which he/she allows you to inspect it periodically. This is how the recommendations are made. They also provide service on retirements and investment planning.
Sometimes the recommendations can be stocks of their own company. However this information is not hidden from you. Then if you are still fine with that you can make your further move.
A full service broker gives you lot of information about investments. These informations are highly beneficial. Since full service brokers are costly, make sure choose the right one. You must compare the charges as well while choosing a full service broker.
All full service does all what is required to be done in researching and making the right decision for your investment. They save you a lot of time and work.
Discounted service is what a discount broker does. Basically, a discount broker provides a discount of the full service to the user. His work is quite simple. When you opt for his service he doesn’t give you all that you need to know. He doesn’t tell to pick a stock. He even doesn’t tell when to sell your stock.
All that he does is that based on your needs he gives you a list of options to choose from. This is where his work ends. He does nothing more that. Rest of the work of research and deciding among the given options are your part of the work.
So now we can see that a discount broker starts your work up and leaves. His work is not as much as that of full service broker. Hence it is obvious that he doesn’t get paid so high as full service broker.
The lifetime of his work is shorter in your investment plan when compared to full service broker but his service is not so ignorable. This could take some time but if you are okay with doing research on just few stocks that meddling with huge number of stocks you can go to a discount broker. He may not do so much but saves a part of your work.
In short from the point of view of those who need full service brokers, the work of a discount broker may seem less beneficial. But from the point of view of those who think they can do the research all by themselves, discount brokers can be of great help. They are telephone based.
Online stock brokers are the cheapest of all. They do their service online. Their service includes giving you research to do, recommending charts to look over and providing news about investments. This is a type of discount stock brokers. So, on the whole, you can just say they assist you in your research and give you all that you need to do your research. In this you do the research and you make the decision on your own. There are no recommendations.
However there are few who recommend stocks to research. But mostly you research on your own and also choose for yourself which stock you are going to do the research.
You can see that their work is simpler than the discount brokers and way simpler than the full service brokers. This is the reason why the online brokers are paid the least.
Online brokers just provide you the general means to do your research. Without them the research still can be done. But online brokers provide you what you need to complete the research thus making your research easy. Since the research is done by yourself you need to know the basics about investments before going for online brokers.
This type of service is for those who have significant range of investments. The work of a money manager is similar to an investor. He takes over the entire investment and manages them on behalf of the investor to whom the investment belongs to. He does all that is required to be done by the investor. In return the money manager gets a percentage of the assets managed by them.
In a more understandable way the relationship between a money manager and an investor can be seen more similar to the relationship between a car driver and the owner of the cab. The car driver takes up the order and does the duty but gets only a percentage of the profit since the car is not owned by him. The owner gets the profit without actually doing any work.
One has to have big sum of money to go for money managers. They go for money managers because it is hard for them to deal with and manage so much of money and they may need an expertise to deal with it.