I have had what I would term full service brokers before — wealth management firms with a dedicated account manager. I remember chatting with mine in the mid 90’s and providing technical IT/Internet/ISP knowledge that aided in profiting from both the .net boom and bust. Not insider information, just professional expertise in the field. I didn’t know a thing about Netscape’s internal business plans, but I knew what they did as a business and how customers used (and paid / didn’t pay for) their products. But the service for which I paid was someone who followed industry trends, engaged people with industry knowledge, and distilled it into investment recommendations. Laughable .net proposals that beget our role reversal aside, it was generally sage advice and saved me having to learn a lot about dozens of verticals.
Now that I don’t have a dedicated wealth management dude, I’ve found the “full service” brokerage to be a bit of a joke. They provide research for you to make decisions. Yeah, so does the company. The SEC. Google, Yahoo, etc. There’s no one doing the research for me – I’m paying trade commissions to fund a source of research for myself. And yeah, it’s all in one place. But it’s all in one of a number of other places too. Not really worth 5$ a trade.
But I happened across a no trading fee brokerage app today – Robinhood. I’ve found a few drawbacks – biggest one is that there is no provision to short stocks, which is a great way to make money in a market crash. They don’t seem to float you money via margin either. But they’ve got some of the iShares funds, the “we keep gold in a vault in London” fund shares, and just about every high dividend stock out there. Buying stock in ten high dividend companies cost me exactly zero dollars. I’ll keep my “full service” brokerage account for shorting stocks (margin trading isn’t my thing – spent too much time studying the great depression) … but all of my straight purchases are going to be made through this service now.