You need a brokerage account in order to trade individual securities, such as stocks and bonds. You may opt for a full service brokerage and meet regularly with your financial advisor or go the lower end route with a discount online brokerage account, where you make your own decisions and conduct your own trades online.
Each brokerage varies with respect to the depth of products and services it provides. The following gives you a broad overview of what a brokerage firm can offer:
Services: Investment advice, real-time quotes, research, investment information and tools, online trading, touch-tone trading, Web site account access, check-writing privileges, and margin loans.
Products: Full selection of traded securities and mutual funds.
Payment: Some advisors may charge you an advisory fee plus receiving a commission from the companies whose investments they recommend.
Benefits: It’s your broker’s job to recommend a variety of investments that, in his or her experience, have performed well and met the objectives of clients with similar profiles. Don`t be alarmed if you`re presented with several choices–this will keep you in the loop and force you to learn more about your investments. Your advisor may periodically call or send information he or she feels may be of particular interest to you. A financial advisor should be regarded as an ongoing resource for financial information.
Disadvantages: The disadvantage of relying on a broker is that you are entrusting your finances to another person who may offer you bad advice and cause you to lose money. Just remember that anyone selling you a security is required to give you a prospectus and disclose the various risks associated with the investment. It`s your responsibility to ensure your investment selections are appropriate and have well-balanced risk and return prospects.