Investors' choice of full service versus discount brokerage accounts

Univariate analysis and multivariate discriminant analysis are used to examine differences in investors who use either discount brokers or full-service brokers exclusively or who use both. Data are obtained from a financial diary panel comprising 980 members of upscale households from the US who use brokers. About 11% of the sample use discount brokers exclusively, 78% use full-service brokers exclusively, and 11% use both types of brokers. The results indicate that investors who use discount brokers exclusively tend to sell stocks more often, have relatively more education, be older, have lower income and net worth, and have a greater desire for aggressive capital accumulation, while rating savings for retirement lower. Investors who are buying stock deal relatively more often with full-service firms, while individuals who are selling stock deal more often with discount brokers.