What Are the Benefits of More Expensive Brokerage Firms?

Investment Recommendations

One of the reasons that many people get involved with full-service brokers is so that they can pay someone to make recommendations for investments. The average person does not want to spend a lot of time researching investments and trying to find the best options. Most people are not qualified enough to research investments and make educated decisions anyway. By working with a full-service broker, you can avoid this problem and get recommendations on some of the best investments available.

Many people go with discount brokers so that they can save money on a per-transaction basis. However, some people would rather save time and spend a little bit extra with their broker. For those people, the full-service brokerage makes a lot of sense. Instead of having to worry about researching investments and spending time managing your account, you can leave this up to your broker. You can delegate the process of investing and save it to someone else who is qualified to do it.

Another benefit that you can get by working with a more expensive broker is a customized investment plan. Most discount brokers will not sit down with you and review your financial situation to come up with the best plan for the future. With a full-service broker, they may be able to help you plan out your financial path. This can help you determine how much money you need to save to meet your retirement goals.

If you are the type of person that trades many times throughout the course of a day or week, the discount broker might be the best option. If you are an investor that likes to buy and hold securities, working with a full-service broker can make more sense. Even though the transaction fees are higher, you will not be making as many transactions, so it should not be a big issue for you. Before making the decision, evaluate how frequently you plan on buying and selling securities so that you can determine if the transaction fees will negatively affect you.