To purchase stocks (also known as securities), some type of stock broker or brokerage is always required. Generally, these are divided into:

-         Full service stock brokers

-        Discount brokers

Full service brokers, as the name implies, charge a higher commission (relative to discount brokers). However, full service brokers offer more services than discount brokers do. Full service stock brokers may offer advice to an investor or may have easy access to knowledge that would take you time to obtain.

Many discount brokerages are available online. Online brokerages are often able to charge lower commissions, since these companies have low overhead costs.

Since a broker is usually required to purchase public equities, this article will address the benefits of using a broker that can provide services above and beyond equity purchase and sales.

A Stock Broker Can Make Investment Recommendations for You

A good stock broker should be able to assess:

-         Your investment goals

-         Your investment timeline

-        Your risk tolerance

-         The amount you wish to invest

If you have clearly defined these aspects prior to choosing your stock broker, you will have a better idea of how well a potential broker can or cannot serve you.

Additionally, if you make your broker well aware of these aspects, and your broker is willing to factor your personal aspects into your investment strategy, your broker is more likely to help you make wise choices.

A good stock broker also has these advantages in regards to investment recommendations:

-         The broker has likely devoted his or her career to learning about many types of investments

-         The broker may have more time and knowledge at his or her disposal than you do – regarding investment decisions

A Stock Broker Can Help You Manage and Direct Your Portfolio

A smart and service oriented stock broker will be curious about your overall investment goals. Such a broker will be able to go above and beyond helping you with single equity trades.

Your stock broker may be able to help you direct and manage your investments for:

-        Retirement

-       Asset acquisition (real estate or other assets)

-   Education

-         Other financial goals

Your financial goals may require investments that are unique in:

-         Risk (i.e., aggressive, conservative, or somewhere in between)

-        Length of maturity (short term investments versus long term investments)

-         How investments are distributed (which sectors, what types of investments, U.S. versus international investments, etc.)

A good stock broker will have the experience, knowledge base, and broad vision to have all of this information at his or her disposal and guide you accordingly.

A Live Stock Broker Can Get You Access to Overseas Markets

As our world becomes more globalized, more and more investors are finding attractive opportunities in overseas investing. Overseas markets often trade at times when the U.S. market is closed.

Your stock broker has access to information about overseas markets that can be beneficial to you, if overseas investing is part of your investment objective. Online brokerages, on the other hand, may not have access to information about these markets.

A Stock Broker May Have Access to Information and Research That is Not Available to You

By nature of his or her time and commitment to the profession, a good stock broker will easily have access to legal data, information, and research that you might not know how to access.

This saves you time in the long term and potentially saves you money.

A Stock Broker Gives You Access to a Live Person for Your Resources

Online brokerages may be cheaper than full service brokers, but full service brokers can answer your questions in real time. Full service brokers can respond to your unique financial goals and situations.

Online brokerage sites include tutorials that attempt to anticipate all questions an investor could have about investing in stocks. However, you may ultimately save yourself time, and get a direct answer to your questions, by using a live broker.

Do Your Research When Hiring a Stock Broker

This article outlines the advantages of working with a service-providing broker, as opposed to working with a discount broker that provides no services other than trading.

Still, it pays to research your broker carefully before committing time and money toward investing.

If you decide to work with a live broker, make sure you thoroughly understand the arrangement you are entering into, up front.

The LawyersandSettlements.com Web site has an article about arbitration in cases where stock brokers acted fraudulently.

Additional Resources

-         An article about what to think about when choosing a good stock broker: http://www.sos.mo.gov/securities/pubs/How%20to%20Choose%20A%20Stockbroker_01.2005.pdf

-        Smart Money Web site:

http://www.smartmoney.com/investing/economy/smartmoneys-2008-broker-survey-23138/?page=all

-       Today’s Chemist at Work:

      http://pubs.acs.org/hotartcl/tcaw/99/may/risk.html

-         LawyersandSettlements.com Web site: https://www.lawyersandsettlements.com/submit_form.html?label=stockbroker_arbitration&ref=article715