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Choosing A Stockbroker
1. Why do I need a stockbroker?
A stockbroker is licensed, and has direct access to trade shares. Therefore,
they can act as your agent to buy or sell shares, for which a fee is charged. A
stockbroker may also offer a range of other services including the provision of
advice on which shares to buy or sell.
2. What are the types of stockbrokers?
There are two main types of stockbroker. The main difference between them is
whether they offer advice or not.
Full service stockbrokers
Full service brokers offer advice on buying and selling shares, make
recommendations and provide research. They also offer other investments such as
options, debentures and bonds and compile tailored investment plans. As
full service brokers offer advice and other services you generally pay a higher
brokerage fee to buy and sell shares.
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Non-advisory stockbrokers
As the name suggests, non advisory brokers offer no recommendations or
advice regarding the appropriateness of your decision, consequently their
brokerage fees tend to be lower than a full service stockbroker. This is
an attractive option for investors confident in their sharemarket
knowledge and trading decisions.
Non-advisory stockbrokers can be divided in two;
Telephone based non-advisory
A phone non-advisory stockbroker will act on your telephone instructions
to execute an order on your behalf.
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Internet based non-advisory
An internet non-advisory stockbroker will execute an order that you have
placed over their internet site by entering it into the trading system.
The lower overhead costs of this service frequently mean that the
brokerage fee is lower. |
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