Full Or Self Service?

The amount of help you need investing determines whether you'll need lots of advice or just a firm to clear your trades

After saving for years, Carole Copeland Thomas finally reached a point where she had some money to invest. “I’m constantly on the go, so I can’t devote enough time to handling my own portfolio,” says Thomas, a speaker and consultant in Woburn, Massachusetts. Her answer: find a broker she could trust to handle her investments and grow her wealth.

Not long ago, Bill Proctor found himself in the same position. A novice investor, Proctor picked up whatever he could on the stock market, boned up and soon started investing in his own picks. “Now,” says Proctor, a reporter for WXYZ-TV (an ABC affiliate) in Detroit, “because I know enough to handle my own trades, it makes sense for me to use a discount broker to move in and out of the market.”

As different as their approaches are, the paths Thomas and Proctor took lie like a fork in the road that each new investor eventually comes to: do you call your own shots and trade through a discount firm, or is it better to rely upon a full-service broker to handle everything from which stocks and funds you collect to when you buy and sell investments? “There’s no solution that’s right for everyone,” says Robert M. Cotton, vice president of investments with Prudential Securities in Chicago. Different personalities, says Cotton, approach the market in their own way.

THE INVESTING SPECTRUM
First, it’s good to get a view of the market, namely what kinds of firms are out there to help you invest and just what they can offer. Although the lines aren’t hard and fast, brokerage firms generally fall into one of the following categories:

Wire-house firms.
These are the national and international firms such as Merrill Lynch and Prudential Securities that run print and television ads and have become household words. The expression “wire house” dates back to the time when only the largest firms had high-speed communications for spreading information. Today, these firms offer a full range of products and services, everything from private consultation to a selection of in-house mutual funds.

Regional firms.
Smaller cousins of the stalwart wire houses, regional firms concentrate on one area of the U.S. Examples include Wheat First Butcher Singer based in Richmond, Virginia, and Legg Mason Wood Walker based in Baltimore.

Independent brokers.
Brokers need to have a securities license, but they don’t have to work for a brokerage firm. Some prefer to remain independent. “I have an affiliation with National Securities Corp. in have an affiliation with National Securities Corp. in Seattle, a full-service firm that provides me with back-office support,” says broker David Fields, who works out of his home in Massachusetts. “I have a great deal of flexibility in how I serve my customers.”

Discount brokers.
As the name suggests, discounters offer the chance to invest for less money, compared with using a full-service broker. If you were to execute five trades with a full-service broker (including different types of stocks and bonds), you might pay a total of $700 in commissions. With a discounter, you’d pay half

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