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Lesson 8. Brokers and Brokerage Houses > Discount Stockbrokers - Pg. 44

Brokers and Brokerage Houses 44 The point is this--control your own money in all aspects. This means that even if you do hire a professional to help you, you are still responsible for ensuring that the person you choose is effec- tively doing exactly what you hired him or her to accomplish. Make sure then, that you periodically reevaluate their performance. Don't get sidetracked by things like emotion or friendship. As with any professionals, if they are not cutting the mustard, get rid of them and hire someone better. Discount Stockbrokers In 1975, standardized brokerage prices were abolished by the gov- ernment. Prior to that time, buying a share of stock cost the same regardless of where it was purchased. The change in the law meant that brokers and brokerages were left to their own devices to determine how much their services were worth, and investors were finally free to decide how much they were willing to pay. That, coupled with the proliferation of information via the media and Internet along with the explosive growth of individual investors (we do talk amongst ourselves after all), led to the introduction of a whole new breed of brokerage, the discount brokerage. Discount brokers all have one thing in common: You pay for what you get. In the world of full service brokers, investors are usually charged the same price regardless of how many of the brokerage's services they utilize. Most discount brokerages have a price structure broken down like a menu. If you want advice, it costs a dollar. You want to place your trade in person? That costs another dollar. The benefit to this, of course, is that if you already know which stock you want to buy, you will pay much less to simply place the purchase order than the investor who wants to sit with the broker for three hours discussing his or her options. Plain English A discount broker provides his or her services piecemeal or à la carte. Discount broker