An affiliate of Weiss Research -- Weiss Ratings, Inc. (www.weissratings.com) -- rates the safety of financial institutions, including brokerage firms. Therefore, to avoid conflicts of interest, it is our policy not to recommend brokers.
Here are some advantages and disadvantages to keep in mind when choosing the right broker for you:
Full-Service Brokerage Firms
Specialized Discount Brokerage Firms
One-stop shopping: You can more readily trade both stocks and index options, at one firm.
Service: Typically but not always -- your full-service broker will have more knowledge of your personal situation and will be able to help you with your investments in many other ways. This is an important consideration for investors who do not subscribe to our service. However, since the instructions we give you will be both explicit and clear, it is less of a concern.
Higher commissions: The standard commissions charged by full-service brokerage firms can be significantly higher. However, with some offices of full-service brokerage firms, you can negotiate lower commissions.
More stringent requirements: Many full-service firms are stricter, requiring both higher net worth and higher margin requirements. If you are an inexperienced investor or one who is trading on your own without advice, this is a protection that is good not only for them, but for you too. However, the qualifications required at other firms can be less stringent.
Discount commissions: Standard commissions are lower across the board. In addition, you may sometimes be able to negotiate still lower commission rates.
Requirements commensurate with risk: The requirements for opening an account are usually less than they are at full-service brokerage firms.
It is generally believed that discount brokers are primarily "order takers" and do not give you the time and service you need. This is true up to a point, but it is changing. Many discount brokers are becoming more service oriented. Moreover, our Safe Money issues and alerts will give you very specific instructions on what to say when placing an order.