What's a Discount Broker?

Question

Would an Investment advisor at my bank be considered a Discounted Broker?

Answer 1

Generally a discount broker is one that charges a lower fee, but does not provide investment recommendations or other "full-service" perks like sending you birthday cards, calling up periodically to ask how your kids are doing (and see if you happen to want to buy any more stocks or bonds), etc.

For people who do their own research, make their own decisions about what and when to buy and sell, and would prefer to give up the "personal attention" (some would call it "sucking up") that a full-service broker provides in order to save a bunch of money, I think a discount broker is the best way to go. Schwab, TDAmeritrade, E*Trade, Scottrade are all examples of discount brokers. (TDAmeritrade lately has been adding a few services typically not provided by discount brokers, but their commissions are still low, so they still qualify.)

People who prefer to have someone else tell them what to buy and sell or who like personal attention/sucking up from their broker - and are willing to pay for it - will generally want to stick to a full-service broker like Merrill Lynch, Edward Jones, most bank investment advisors.

How much is the difference in price? It will vary depending on the size of the transaction and which brokers, but as one example, I know of one transaction (a stock sale of 190 shares @ $20.85 per share for a total a little under $4000) that cost $114.99 at one of the full-service brokers. The same sale at TDAmeritrade would cost $9.99.

Answer 2

First off: Banks and insurance companies are the worst place to get investments from. (make the effort to research this.... it will save you plenty).

Discount Broker: Usually "on-line" companies that allow you to trade stock for commissions between $20 and $9.95. Less than $9.95 are "deep" discount brokers, usually best for experienced investors.

There are "Full Service" brokers that will "recommend" investments for you. These are usually commissioned representatives. Some are very good at what they do. All are fairly expensive.

Dave W.'s answer is very good.

Answer 3

Probably not.

Ask them how they would charge you to sell 100 shares of IBM. Then ask about 1000 shares.

A discount broker will quote you a flat fee of $15-25 no matter how many you buy/sell.

A full service broker would charge you a fee that's a lot higher and reflects the amount of asset being sold.

Answer 4

Parada 2012 Collection
http://bit.ly/1gJdr4d

Answer 5

a broker who just buys and sells stocks without giving you worthless advice.