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Advantages of Full Service Broker
Do you want a broker to help you with advice on how to investment smartly? If you do, then you should be looking at a full service broker. But don’t take our word for it, here’s why you should choose a full service stockbroker.
Full service stock brokers offer a variety of investment services and are preferred by a large number of investors and traders. Full service brokers are a perfect choice for people who lack the financial experience and want security and comfort while investing.
Although services and products along with their fees and costs vary from firm to firm, a full service broker is worth the cost for the following reasons:
Access to Research on Stocks and Bonds
Full service stock brokers employ a team of stock analysts and they have access to in-depth research conducted on the stock market trends and individual stocks. As you might know, research goes a long way as far as the stock market is concerned.
They will help you pick the right places to invest your money in, so that you can get the most out of your investments. If you want to know how a particular broker has performed, you can ask them to show you their past track record and also give customer references.
Retirement Planning
People often invest money in the stock market as a way to keep up with inflation and build a nest egg to enjoy after retirement. With a full service broker, you get access to their services that let them plan out your retirement investments for you. They will select which long-term investment plans you should opt for to get the most out of your money. With that in place, you can breathe a sigh of relief as your life after retirement has already been taken care of.
Tax Strategies
With capital gains in the stock market comes the wrath of taxation. With a full service broker you need not fear that. These brokers are more than capable to chalk out profitable tax strategies for you by customizing your portfolio and choosing investments that provide tax exemptions in the long run.
Experience
One of the biggest benefit a full service broker can offer you is their experience. Along with the firm’s years and years of experience, you are also getting the stock broker’s individual experience at your complete disposal. With that you will get the best service possible.
Opportunities
When you opt for a full service broker, you get the opportunity to invest in private equities and hedge funds. You would not have got that opportunity if you opted for a discount broker. Similarly, a full service broker will help you create an investment portfolio that is for you and only for you.
Stockbrokers receive compensation when a customer uses their brokerage firm to buy or sell shares, take a loan or use investments as collateral.
Full service brokerage staff go through regular training programs in order to prepare for their securities licensing examination. Along with that they also undergo sales training to educate themselves on the services and products that their firm offers to the customers.
Of course good advice, doesn’t come cheap and full service stock brokers are more expensive than online discount brokers. With a full service stock broker, you pay for active management and advice about buying and selling investments.
Along with that you also pay fees for the overhead costs of the services provided by the broker. But do keep in mind that sometimes the broker and their firm will only present and recommend you the investments and services that incur fees and other costs that you have to pay from your pocket. Hence, often you would see that brokers will go out of their way to push a certain product in your direction because of added incentives on the firm’s part.
Nowadays, some full service brokers prefer retainer models with ongoing fees for the very simple reason that they can predict their income. With a fee-based model you are charged annual fees because the brokers are managing your account.
With such a model, a full service stock broker becomes a gatherer because he will be compensated accordingly. They assign a manager to manage your account. In the event that you are dissatisfied with the manager, he will try to find you a better manager, but these managers will always have compensation arrangements with the stock broker’s firm.
What you need to keep in mind while dealing with most stock brokers is the fact that they are sales people and they need to sell their product to you. You have to decide for yourself what is good for you and what is not.