Choosing the Right Financial Advisor: Brokers, Managers & More

If you are new to stock investing, you can rely on money managers, discount brokers and other types of financial experts to provide you with professional investment advice and wealth management strategies. Choosing the right person to assist you in managing your investments spells the difference between growing and losing your money. Here’s a list of the common types of brokers that can provide you with various money management services.

1. Discount Brokers

This type of broker, also known as online broker, is ideal for people who already have in-depth knowledge of investing and finance. If you prefer a hands-on approach in managing your investments, a discount broker is suitable for you. You can compare this broker to an order taker online or on the phone. The main advantage of discount brokers is that their services are cheaper compared to those offered by other types of wealth managers.

One big drawback with discount brokers is that you cannot expect them to help you decide which stocks to buy or invest in. Even if they will provide you with tools and resources to help you decide what and when to buy or sell, such tools are not enough for you to come up with a winning investment strategy. When using this type of broker, you still have to do your own research on the companies you want to invest in.

2. Discount Brokers with Assistance

These are a hybrid of online and full-service brokers.  For additional fees, you can have access to assistance services and additional information vital to your investment decisions. Websites owned by discount brokers with assistance offer investing tips and other pertinent data on various companies and markets. However, this type of broker is not suitable if you are a new investor because the information discount brokers with assistance provide may not be that comprehensible for the beginner investor.

3. Money Managers

If you have the money, but you do not have the time and the knowledge to manage your wealth, the best professionals you can hire are money managers. Brokers of this type will invest your money and manage your wealth on your behalf. They will do their best to increase the value of your wealth or investments because they only earn based on the growth of the assets that they manage for you.  On the downside, hiring a money manager can be quite expensive, and the initial investment that he or she will require will be higher than that for a discount broker.

4. Full-Service Brokers

A full-service broker is appropriate for an investor who does not have the time to research or formulate investment strategies. This broker can provide you with recommendations on various listed companies and stocks. Full-service brokers can also assess your financial capacity and personal situations in life in order to determine your needs, risk capacity and suitability to various kinds of investments. However, full-service brokers are expensive to maintain. Besides, they typically handle several investment portfolios simultaneously, so you might not be given priority or the attention you require if your investment is small.