Which type of brokerage offers fewer services in exchange for lower transaction fees?

The type of brokerage that offers fewer services in exchange for lower transaction fees is discount brokers. Discount brokers are designed for investors who prefer to make their own trading decisions without needing extensive research or advisory services that full-service brokers typically provide. They facilitate trades and may offer basic tools and resources, but they do not provide personalized investment advice or management services. As a result, the commissions and fees associated with discount brokers are generally lower compared to full-service brokers, making them an appealing option for self-directed investors who want to minimize costs.

In contrast, full-service brokers deliver a broader range of services, including financial planning, investment advice, and portfolio management, which justifies their higher fees. Online brokers can also provide reduced-fee trading and are similar to discount brokers, but they may still offer more online tools and resources than a traditional discount broker. Investment advisors, on the other hand, typically charge fees based on assets under management and provide comprehensive financial planning services, which also leads to higher costs for clients.