Self-directed brokers are the most cost-effective option for investing in derivatives. They provide a platform for investors to execute trades independently without the additional costs associated with advisory services offered by full-service brokers. Investors are charged lower transaction fees, making this option ideal for cost-conscious individuals who are comfortable making their own investment decisions.
B. A full-service broker: Full-service brokers charge higher fees because they provide additional advisory and management services.
C. An integrated firm: Integrated firms offer both retail and institutional services, which generally come with higher fees compared to self-directed platforms.
D. An investment boutique: Boutique firms typically specialize in niche markets and may have higher service costs, which are not ideal for cost-effective derivatives trading.
[Reference:CSC Volume 1, Chapter 1, "The Investment Dealer’s Role – Retail and Self-Directed Brokerage Accounts" highlights the cost advantages of self-directed accounts., ]
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