Apart from a great deal of skill and knowledge,investing in the stock market would also require the services and assistance of a stockbroker. Many investors feel that stockbrokers are not required but they are the ones who would execute your trades and may even give you advice.
Earlier the only brokers that were available were the full-service brokers who would charge a standard commission fee, which was usually quite high. Now with advances in technology, investors have access to all kinds of information, which makes trading more efficient.
Let us look at the four main categories of brokers and what they offer.
The full-service broker is a traditional type of broker who recommends specific stocks for you to consider. First, the broker would determine your personal situation and determine your needs as well as which investments are best suited for you.
Then after a thorough financial assessment, the broker would chart out a financial plan. This plan would be reviewed periodically and accordingly adjustments would be made.
Using the services of a full-service broker would be ideal for those who do not have much time or interest to take their own investment decisions.
- Discount broker:
A discount or online broker is the one who takes the orders. The order would be usually taken online or over the phone. The phone conversations are kept to a minimum. They would not provide any help or assistance to choose a stock or when to sell it.
If the trade is taken online it is possible that one might converse with one of the employees instead of them.
- Discount broker with assistance:
This category of brokers is somewhere between a full-service broker and an online broker. They might offer some help to investors. Their websites might not have stock recommendations but they could have helpful resources like newsletters.
- Money manager:
The money manager is well suited for those who have a substantial amount of money to invest. They are well equipped to handle hefty portfolios.
Most money managers are responsible for managing the entire portfolio and making all the investment decisions. In exchange, they would charge a percentage of the total assets managed.
This option may be an expensive one and not many would be able to afford it. However, if one has the money, it is a great choice to consider.
There are different kinds of scams in the trading industry one must be watchful about. One such controversial example is that of Fintech Ltd. The debate about the legitimacy of this software has been a long-standing one. Read this complete Fintech Limited review to know more.
Before choosing a broker one must ensure that they are registered and have the necessary protection plans in place. Choose one only if you are comfortable and well versed with all that they have to offer.