Q How should I choose a broker?

A The classic broker/customer relationship is with a full-service brokerage firm (also known as full-price brokers). You work with someone who advises you on your portfolio, makes stock, bond, cash and mutual fund buy-and-sell recommendations, passes along the brokerage firm's research, and takes your calls during market squalls. Think commissions and pinstripe suits. Think Merrill Lynch.

The two main competitive business models in the industry are discount brokers and online brokers. In essence, both are for do-it-yourselfers. There's no customer hand-holding with discount brokers. It's for investors who want to make their own buy and sell decisions, access research and enjoy cheap commissions. Charles Schwab & Co. was a pioneer in this. The advent of online brokers dropped trading commissions even farther, and made a wealth of information available to investors. A good example is TD Waterhouse.

If you decide not to engage the services of a full-service broker, the important question then becomes what sort of services are valuable to you? The cheapest trading commissions? The fastest execution? Access to a wide range of research? Low fees for a buy-and-hold strategy?

There are a number of ratings services that can help you pick the right brokerage firm. Check out the consumer rating company J.D. Power and Associates, which ranks brokers at www.jdpower.com/finance.

The magazine Smart Money has been ranking the brokerage industry for 15 years. Its annual survey is at www.smartmoney.com/brokers. Next week: The full-service broker.

Chris Farrell is economics editor for American Public Media's weekly "Marketplace Money" program on public radio. He lives in St. Paul. Send questions to: cfarrell@mpr.org, or to kaching@startribune.com, and put "Your Money" in the subject line.