A broker is a firm or an individual that charges a small commision or fee for executing the selling and buying orders that an investor submits. A broker is also that person who refers himself to the role of a firm when it starts acting like an agent for the customer and then charges him with a full blown service commission. This process was revolutionary because the internet services caused a paradigm shift.
A broker has numerous jobs at hand. As a person who executes client orders, a broker can provide investors with investment plan option, market intelligence and a ton of research. These people may also cross sell numerous other products and financial services that their brokerage firm will offer such as giving access to tailored solutions to clients that have a high net worth. In the past, only the wealthy person could come in close contact with a broker and get access to the stock market. When we talk about online brokering we see how it triggered a huge explosion of brokers who play at discount that allow investors to trade at a much lower cost without any personalized advice.
What do you take away from this?
A broker can be of many kinds and types. A discount broker is one who executes numerous trades on behalf of clients but doesn’t typically provide any investment advice himself. A full service broker dealing with the Best Demat Account gives a good amount of execution services along with tailored advice on investment and further solutions. Brokers go ahead and register with FINRA where as investment advisers register with the help of SEC as RIAs.
Full Service v/s Discount brokers.
A full service broker gives out a variety of services like investment advice, market research, planning out retirement and to top it all, a high range of all kinds of investment products. For that the investors usually expect to pay the brokers a high range of commision on these trades. Brokers mostly receive compensation from numerous brokerage firms based on how well they’ve done the sale of their investment products. A high range of increasing number of brokers usually over fee based investment accounts and products like well managed investment accounts.
Many kinds of trades can be executed by discount brokers on behalf of their clients. For this they charge a reduced commision that range from five to fifteen dollars a trade. This low fee structure is usually based on lower costs and volume. These people usually don’t give any investment advice and brokers mostly receive a salary than a commision. Most of the discount brokers out there offer an online trading platform and they attract a huge number of investors who are self directed.
A real estate broker.
When we talk about the real estate industry, we see that a broker is a person who is licensed as a real estate profession and typically respresents the person who is selling the property at hand. His duties include determining the market value of the properties and listing them out for sale.