I have always used a Discount Broker but years ago everyone into buying stocks used a full service broker. In today's world is there any value in using a full service broker and paying what are now outragous fees?
Does anyone still have one? If so, why?
Nowadays, there seems to be a couple of possible reasons to use a full-service broker:
1. Cluelessness. People who know nothing about investing and need a ton of hand-holding...and don't realize that they can still get a lot of info/help at a discounter...or are afraid to try it.
2. Being filthy rich...to the point where the full-service broker is going to pay a lot of personal attention to your account(s)...and probably give you all the best rates.
One gray area is where you don't have a choice...like the company 401k is with Fidelity, so the commission is $17.95 and not something lower. Of course, for Fidelity, that's a discount rate.
Before discount brokers came available, there was no other way to make purchases (and you would not only get hit by the fees, but also penalties for not purchasing round lots. Today there is no reason to use a full service broker that I can think of. My parents still do because they always have and trust the guy dealing with their portfolio. I've recommended that they just dump everything into an index fund but when you're in your 80's you tend to be pretty well set in your ways.
Yes I still have a full service broker that I rarely use. My RSP is self-directed however.
Reasons for keeping my TD Waterhouse Account? I like being able to call up someone in the markey occassionally and talk to a person regarding direction and options. Also it's a means of keeping accounts physically seperate (I bank with CIBC, RSP is with Royal Bank and broke is TD) so I can keep better track of what I'm doing with my money. Call it financial planning and identity theft buffers.
I like being able to call up someone in the markey occassionally and talk to a person regarding direction and options.
So Mills, if I give you my phone number, will you pay me a bunch of money to talk too? No...wait...that's getting into an area that I really don't think we should. But you know what I meant.
Wouldn't you be better served by opening up more discount accounts at more banks for ID theft protection, and the other reasons you gave, and just joining a share club for discussions, or getting your info from here?
I know of some people that have been with their full service brokers and the same adviser for the last 20 years.
They had the opportunity to move to a discount broker...they were afraid to leave.
They even read and took notes on Gail Bebee's "No Hype"
-in too deep
-personal relationship with adviser
-adviser has them in complicated investments eg labour sponsored, and flow through partnerships
-wrong generation for discount broker?
-they know my investment philosophy
-or maybe they're using me as a guinea pig
PS TD e-funds are only available as a client with TD discount broker
A large part of my problem is that banking services are very limited where I live...let alone investment clubs etc. So I've diversified some but as my holding are too small currently for fee free accounts I take the $150 annual charges (combined amounts) hit knowing that if I compiled them all I might just barely qualify.
It's not an ideal situation but it's one that is so far working for me as I learn more and experience more in the investing world.