A broker is an individual or a firm acting on behalf of the client in areas which involve investments. Trading in the stock market, for instance, can only be done through a licensed broker. However, the level of involvement of the broker may vary, depending on the type of broker one employs, or the agreement that is reached with the chosen broker.
If one employs the services of a full service broker, one is entitled to a wide range of brokerage services. The client does not need to conduct his own research – at least not as thoroughly as he normally would be required to – because a full service broker should be able to provide this service. Such brokers can also give a lot of valuable advice on which types of securities to invest in, and how an investor should place his assets. In some cases, and depending on the level of involvement is agreed upon, a full service broker can carry out transactions without having to consult with the client first. This is, of course, quite risky. Even if an investor already has a full service broker, it is always better to be well-informed about how and where the investments are being made.
There is a premium placed on full service brokers because of the variety of services they offer. Of course, this also means that the client has to pay a substantial amount. However, getting a full service broker may be very helpful, especially for beginning investors.
Those who are more familiar with the workings of the stock market as well as other investment venues may save more money by hiring discount brokers instead. As the name suggests, it is much cheaper to do this than to hire a full service broker. By doing so, one understands that the range of services is quite limited. One will have to do independent research and be prepared to speak with the broker mainly for executing transactions.
