Stock Brokers and the Commissions they Charge

Nothing revolutionized the stock market more than the elimination of fixed commissions.

Ever since the fixed rates were abolished, brokerage firms have competed with each other to offer customers the best rates and services.

Consequently, commission rates available to investors vary greatly.

How Much Commission Do Stock Brokers Make

Stock Brokers' commissions differ not only from firm to firm, but also within a particular firm.

They can vary depending on the size of the transaction, the volume of business done by the customer, the services the broker may perform for the customer, or a combination of these and other factors.

Investors should feel free to request a full explanation of rates and to shop around for the rates and services most suited to their needs.

One factor to consider in selecting a broker is the type of service you need.

Some investors may want a "full service" broker who provides securities research services and investment recommendations according to the investor's individual situation.

The stockbroker takes into consideration such things as the amount of money being invested, whether the investment is to be long term or short term, the estimated risks and rewards, and how these match the investor's goals.

Another investor who already knows enough about the market to make decisions without a broker's advice may need only a broker to execute a transaction.

While most brokers may adjust their rates from time to time, so-called "discount" brokers charge substantially discounted rates and generally confine their services to executing of orders at the investor's direction.

Usually, discount stock brokers do not provide research or other services for their customers.

Ask the experts! Seek professional help if you need it.

As the commissions shrink, professional advice is no longer expensive.

Even if you are a do-it-yourselfer, consider a periodic checkup with a financial adviser to tune your portfolio's performance!


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