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

advantage of that firm’s research. Instead of doing your own stock picking, you can follow the advice of research departments that have millions of dollars at their disposal and teams of professional securities analysts. “As an independent,” says Fields, “I don’t have to push whatever stocks the firm has in inventory. Instead, my firm provides me with research from many leading brokers.”

GO IT ALONE
While many investors are content to follow full-service brokers’ advice, Bill Proctor prefers to go his own way. “I had heard from many of my friends that the big firms won’t leave you alone,” he says. “All they want to do is sell you what they have on hand.” Sure enough, Proctor got a taste of how persistent a broker can be shortly after he took an interest in investing. After attending a seminar, he was pursued by a broker from a leading full-service firm who just didn’t understand the word no. “He kept calling me, trying to get me to buy a small-company mutual fund, which I didn’t want,” says Proctor, who nevertheless tracked the same investment to see how things turned out. “Not too long afterwards, the same fund’s price went down the drain.”

So Proctor decided to educate himself about the market and work with Schwab, a firm recommended by his associates. “I follow several low-priced stocks and trade them frequently, moving in and out within 45 days. Because I trade actively, the people at Schwab provide me with the latest information on the companies I ask about.” Although few discounters have in-house analysts, most will send investors research materials from sources such as Standard & Poor’s, Value Line, Bloomberg and Morningstar.

“I actually do my trading online,&qu
ot; says Proctor, “And once I have the necessary information, I even trade options and sell short online. [Selling short is a maneuver aimed at making money when a stock's price falls.] Because I trade online, I get further discounts on the commissions I pay.

As you might have read in BLACK ENTERPRISE last October (see Bytes to Bucks), many discounters offer lower fees for electronic trading, as little as $7.95 per trade in some cases. Since most discount firms ate easily accessible by phone, computer skills aren’t mandatory. Just remember, you’ll pay a slightly higher commission when you place your order over the phone.

THE BEST OF BOTH OF WORLDS
While there are distinct differences between discount and broker-assisted investing, that doesn’t mean using one excludes you from the services of the other. Take the case of Stephen C. Lewis, national president of the National Black MBA Association. “There are some situations where I just want to buy a certain stock,” says Lewis. “For those trades, I’ll use a discounter.” Other financial decisions, Lewis says, have a longer-term impact. “For them, I want to work with someone I can trust. Fortunately, one of my college friends is the local branch manager of A.G. Edwards, a national firm. I can call him when I want to. Last October, for example, when

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