Types of Brokerage Accounts

Full-Service Brokerage Accounts

Investors seeking the expertise of a financial advisor can consider full-service brokerage firms such as Merrill, Morgan Stanley, Wells Fargo Advisors, and UBS, among others. Financial advisors are paid to help their clients develop investment plans, execute their transactions, monitor their investments and the markets, and more. Financial advisors work on either a nondiscretionary basis, where clients must approve transactions, or on a discretionary basis, where transactions don't require prior client approval.
Full-service brokerage accounts charge either commissions on trades or advisor fees. A commission account generates a fee anytime an investment is bought or sold, whether the recommendation came from the client or the advisor, and whether the trade is profitable.


Discount Brokerage Accounts

Investors who favor a do-it-yourself investment approach might consider a discount brokerage firm. These firms charge significantly lower fees than their full-service counterparts. However, discount brokerage firms, such as Charles Schwab (SCHW), Fidelity (FIS), and E*Trade (ETFC), offer fewer services in exchange for these lower fees. This may suit investors who are most concerned with keeping costs low and executing trades via easy-to-use online trading platforms.
For example, an investor who decides on a typical discount broker can expect to open a regular taxable brokerage account (or retirement account) with a $500 minimum required amount. Little or no commission is charged to buy or sell most stocks, options, or ETFs. Some discount brokers may charge fees for non-U.S. or thinly traded stocks, but this varies from broker to broker.
The purchase of Treasury bonds typically involves no commission (but bonds traded in the secondary market may). Many brokers, including Schwab, Fidelity, and E*TRADE, also offer a wide variety of mutual funds for no transaction cost.


Robo-Advisor Accounts

Robo-advisors are accounts where they, not the account holder, select the investments using algorithms without human participation. Moreover, those investments are usually restricted to mutual funds or ETFs. The cost can be around 0.25% to 0.50% of assets under management per year.
The minimum required to open an account can range from $0 to $500 to over $5,000. Robo-advisors might be right for people new to investing and experienced investors who prefer a hands-off approach to portfolio management.