What is the difference between full-service, independent, and online broker-dealers in the United States?
Historically, all broker-dealers were full-service broker-dealers. The full-service model centers on an individual representative providing one-on-one investment guidance to an investor. The representative is employed by a broker-dealer organization. Examples of full-service broker-dealers are Morgan Stanley Smith Barney (Citigroup) and UBS Financial Services. Over the past 20 years, the independent broker-dealer model has emerged, wherein the representative is a nonemployee who maintains accounts and executes transactions through an unaffiliated broker-dealer. Both full-service and independent broker-dealer models stress the need for a personal relationship between client and representative. Examples of independent broker-dealers are LPL Financial and Raymond James. Online brokers are the evolution of the discount broker to the Internet. Through them, self-directed investors can determine their own investment strategies and gain access to lower-cost transactions. The online model appe
