Investment Advisors (Stock Brokers/Financial Advisors)

There are three general types of stockbrokers: a Discount Broker, a Premium Discount Broker, and a Full Service Broker. They all have the same basic obligation: it's their job to see that what they advise or sell you fits your financial condition, sophistication, investment objectives and tolerance for risk. The difference is how much advice and other services they provide, as well as their charges.

Discount (Limited service) broker

• In the pure form, discount brokers only provide hassle-free securities trading. They also make research available for you t o use, as well as tools that allow you to manage your own portfolio.
• Cost to you is lowest of the three types of broker.
• More and more discount brokers provide advice offerings, including computer generated planning tools that analyze your holdings and provide computerized advice. Some even provide access to advisers who can give guidance whenever you need it - if you ask for it. Advisers answer basic questions on portfolio planning, asset allocation and recommended funds. Some companies charge for the advice. (If you ask for advice, ask if the adviser works on a commission basis).

Premium Discount Broker

• A Premium Discount Broker provides more investment advice than a pure discount broker. They generally also provide record keeping, portfolio-analysis tools, and more information. For example, at least one firm tells you the total shares you own in a company, even if the shares are spread over several accounts. At least one premium discount broker offers free banking services.
• Premium discount brokers charge more than basic discount brokers.

Full service broker

• A full service broker provides personal one-on-one advice on investments as well as makes the trades for you.
• Full service brokers generally have different levels of service. The more service you want, the higher the price.

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