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What's the difference between a full-servicebroker and a discount broker?

An investment dealer or broker will help you buy or sell stocks or bonds. Full service brokers will execute your buy and sell orders and will also give you advice or guidance about what to buy and sell and when to do it. These investment dealers also offer research on various companies and industries as well as portfolio and financial planning. Discount brokers will only execute your buy and sell orders. Investment advice is not provided. Commissions are higher for the full-service broker because part of the commission fees pays for the investment advice.

If you need or want advice, a full-service broker probably makes sense. You have the advantage of a professional watching the markets for you, keeping you informed about what opportunities are available, and accessing your portfolio performance.

If you make your own investment decisions, a discount broker may be all you need.

Discount brokers cater to knowledgeable "do-it-yourself" investors. Discount brokers emerged after a decision in 1983 to replace fixed commission rates with unfixed, negotiated commissions on trades at all Canadian stock exchanges except those for locally-traded issues on the Alberta Stock Exchange and the Vancouver Stock Exchange. Those two exchanges (which merged to form the Canadian Venture Exchange) later phased out fixed commission rates.

Your knowledge and comfort level with investments will determine whether a full-service or a discount broker makes sense for you.