This is not investment advice. The information provided is for educational and informational purposes only and does not constitute a recommendation to buy or sell any financial product.
A full-service broker is a broker that offers execution, research, advice, and personal service under one roof. The full-service broker employs analysts who publish research, advisors who give recommendations, and relationship managers who help the client with the trading decisions. The full-service broker charges a higher commission for the service, and the broker often charges a percentage of the assets under management.
What a full-service broker is
A full-service broker is a broker that offers execution, research, advice, and personal service under one roof. The full-service broker employs analysts who publish research, advisors who give recommendations, and relationship managers who help the client with the trading decisions. The full-service broker charges a higher commission for the service, and the broker often charges a percentage of the assets under management.
The full-service model has been under pressure from discount brokers, robo-advisors, and online trading platforms, but the model is still relevant for traders who want guidance, who want a personal relationship, and who are willing to pay for the service. The largest full-service brokers include the major investment banks and the wealth management divisions of the large financial groups.
The main benefits
The first benefit is the research. A full-service broker publishes analyst reports on thousands of stocks, and the reports include the financial models, the valuation, the rating, and the target price. The research is available to all clients, and the research is often more in-depth than what is available from a discount broker.
The second benefit is the advice. A full-service broker assigns an advisor to the client, and the advisor helps the client with the trading decisions, the asset allocation, and the portfolio rebalancing. The advisor knows the client's goals, the client's risk tolerance, and the client's tax situation, and the advisor tailors the advice to the client.
The third benefit is the personal service. A full-service broker offers a relationship manager who is available by phone, by email, or in person. The relationship manager helps the client with account opening, with funding, with withdrawals, and with any issue that arises. The personal service is valuable for traders who do not want to handle the operational details.
The fourth benefit is the product range. A full-service broker offers a wide range of products, including stocks, bonds, options, futures, mutual funds, ETFs, and alternative investments. The full-service broker can serve as a one-stop shop for the trader's investment needs, and the full-service broker can tailor the portfolio to the trader's preferences.
The costs
The first cost is the commission. A full-service broker charges €20-€50 per trade, and the commission is higher than the commission at a discount broker. The commission is justified for traders who use the advice and the research, and the commission is too high for traders who do not need the service.
The second cost is the asset-based fee. Some full-service brokers charge 0.5 percent to 1.5 percent of the assets under management per year. The fee covers the advice and the relationship management, and the fee is in addition to the commission. The asset-based fee is high for traders with a large portfolio, and the asset-based fee can erode the returns over time.
The third cost is the platform fee. Some full-service brokers charge a platform fee of €20-€50 per month for the trading platform. The platform fee is a fixed cost, and the platform fee hurts small accounts the most.
Who should use a full-service broker
A full-service broker is a good fit for traders with a large account, who want a personal advisor, and who value the research and the personal service. The full-service broker is also a good fit for traders who are new to the markets and who want guidance, and for traders who have a complex financial situation that requires tailored advice.
A full-service broker is not a good fit for traders with a small account, for traders who are self-directed, or for traders who are sensitive to the fees. The trader who does not use the research or the advice should not pay for the service, and the trader should consider a discount broker or a robo-advisor.
How to evaluate a full-service broker
The first check is the research quality. The broker should publish research on a wide range of stocks, and the research should be in-depth. The trader can test the research by looking at a few reports, and the trader can compare the research with the research from other brokers.
The second check is the advisor's track record. The advisor should have a track record of giving good advice, and the advisor should have a low turnover in the recommended portfolios. The trader can ask the advisor for references, and the trader can check the advisor's credentials.
The third check is the total cost. The broker should publish the commission schedule, the asset-based fee, and the platform fee. The trader should calculate the total cost for a representative trading pattern, and the trader should compare the total cost with the cost of a discount broker.
Common questions about full-service brokers
Are full-service brokers worth the cost? For traders who use the research and the advice, yes. The advice can save the trader from costly mistakes, and the advice can improve the returns. For traders who do not use the advice, no.
Can I switch from a discount broker to a full-service broker? Yes, and the trader can also hold accounts at multiple brokers. The trader should compare the total cost and the total service before making the switch, and the trader should keep the discount broker for the trades where the cost matters.
What is the minimum account size for a full-service broker? The minimum varies by broker. Some full-service brokers require €100,000 or more, and some full-service brokers accept smaller accounts with a higher commission. The trader should check the minimum before opening the account.
Related resources
Where to start
If you are evaluating full-service brokers, the most useful first step is to identify the services you actually need (research, advice, personal service), and to compare the total cost across three to five brokers. Our broker comparison lists the full-service brokers and the fee schedules, which together tell you what the broker offers before you open the account.