Types of Investment Brokers

The level of engagement you desire to have with your investment strategies has a direct effect on the type of investment broker you should choose. If you lack time to research and choose your own investments, full-service brokers might be the better choice for you. On the other hand, online brokers are ideal if you already understand investments and want to manage your own.

• Brokers that provide you with full service offer you security recommendations for you to purchase or sell, such as bonds or stocks. These are the brokers that provide you with personal attention and service at a one-on-one level, so you completely understand what is going on with your investments. Online brokers, however, have the expectation that you will make your own decisions on which stocks and bonds you will buy or sell. Although some online brokers offer security recommendations, it is at an additional cost.

• Full-service brokers have a team of employees in the research department that do the research on the various securities and create reports from their research findings. These are the brokers that also provide you with advice on retirement planning and taxes. Although online brokers usually do not provide you with one-on-one advisement, they do offer access to online research, portfolio management, trading platforms, charts and market news.

• Since full-service brokers offer the most personalized services, they tend to cost much higher for commission charges. According to Motley Fool, they charge an average $150 per trade, as well as an annual maintenance fee for around the same price. Online brokers, on the other hand, charge an average of $7 to $20 per trade.