Should you open a brokerage account?
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Meanwhile, discount brokers may or may not have brick-and-mortar buildings. They concentrate exclusively on executing your trades, either online or via phone, and generally do not advise you on investments. Many discount brokers do make research and tools available online to help you manage your portfolio.

Discount brokers excel at keeping costs low. They usually charge rock-bottom commissions and require lower account minimums, although this varies greatly from firm to firm.

A few well-known discount brokerages include E*Trade, TD Ameritrade and Charles Schwab, which also has a full-service brokerage.

Hidden costs
Both traditional brokers and discount brokers have advantages and disadvantages, Tyson says. But whichever option you choose, Tyson warns you to be on the lookout for hidden costs.

For example, a traditional broker may have a financial interest in seeing you make specific investment choices.

"The full-service brokerage adviser is generally a salesperson," he says. "They might get a percentage of assets under management, so at the end of the day, you're working with someone whose compensation is tied to how much money you place with them.

"That can be appealing to people because you've got someone there to hold your hand, to help narrow the choices and direct you. But it's going to cost you money for that personal relationship and they may not have your best interests at heart."

The discount broker

Pros Cons • Excel at keeping costs low. • Rock-bottom commissions and lower minimum asset requirements. • Offer little or no investment guidance. • May charge "hidden" fees.

While discount brokerages usually charge less to trade, they can still eat into your bottom line by nicking you with less obvious fees, Tyson says.

"With discount brokerages, you may see ads for a $7.99 commission, but they're making money other ways," Tyson says. "Maybe they have a low interest rate money fund attached to the account, or they whack you with other fees. You really need to do a full fee comparison."

Which type of broker should you choose?

Lou Polster, a vice president with A.G. Edwards in San Diego, says unless you're a seasoned investor, it pays to have the services of a full-service stockbroker.

"The bottom line is experience," he says. "Just because you have the technology (to trade) doesn't mean you know when to buy and sell, or if you should buy and sell. I think if you're on your own, you can get that experience, but it does take a certain amount of exposure and experience in dealing and trading to figure out what's going on."

Tyson agrees that there is an innate advantage to having a trusted adviser onboard. It could be someone you pay hourly for advice, or a mentor or knowledgeable friend to play devil's advocate.

"There is so much emotion caught up in managing your own money that part of the value of having somebody else direct is that it's not their money -- they're emotionally detached," he says. "They should be less likely to make snap decisions."