Revealed: The right stockbroker account for you

Fsp Invest, 26 Jul. 2013

Tags: stockbroker, stockbroker account, execution-only, advisory, discretionary, what is an execution only account, what is an advisory account, what is a discretionary account, broker

When you open an account with a stockbroker, you’ll have to decide what type you want. Read on to discover the difference between execution-only, advisory and discretionary…

When you open an account with a stockbroker, you’ll have to choose between the three different types of services available.

The cheapest option is where a broker just buys or sells shares on your behalf explains Francois Joubert, analyst of the Resource and Scarcity Report.

The more expensive options are where a broker also gives you investment advice, or completely handles your investments for you.

Choose from these three categories of stockbroker accounts

Let’s have a closer look at these categories…

#1: Execution-only brokers
With execution-only brokers, all you do is contact the broker and ask him to either buy or sell the shares of your choice.

The broker will not give any advice on the shares. He’s simply there to execute your buy or sell instructions.

#2: Advisory brokers
For a fee, you can talk to advisory brokers. These brokers give you a helping hand.

If you select an advisory broker, he will ask you to come in for an interview. The broker needs to know what you’re looking for, your income and commitments, and your attitude to risk.

An advisor can offer two services:
  • He will have details of all your investments and give advice on them as a whole
  • He will give ad hoc advice on buying and selling shares you suggest

#3: Discretionary brokers
This is the most expensive of the three services.

This type of broker buys, sells, advises on and manages your shares completely. He will be in close contact, keeping you informed.

As with an advisory broker, you will have to undertake an initial interview. This will give the broker a clear idea of what he should be doing on your behalf.

There you have it, the three types of broker accounts available to you.

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