How to Choose a Broker

Now that we have established the major differences between full service and self service brokerage firms, how do we choose which firm best fits our needs? There are several factors one should take into consideration when making such a decision, but to keep it simple, I have chosen what I believe are the top 3 factors. The first factor is:

• Age: Are you close to retirement, or are you young? Many may wonder why this is a factor. In most cases, people close to retirement tend to be more conservative. Their risk tolerance is a lot lower then say, younger investors. Thus they may not want to make their own investment decisions, and rather leave that up to professionals. In this case, a full service brokerage firm would best fit their needs. Young people tend to have a higher risk tolerance because they know they still have plenty of time to recuperate any losses they may encounter. In this case they may choose to make their own investment decisions, and thus a full service brokerage firm would be costly and unnecessary.