Types Of Stockbrokers

Broadly, they are of two kinds namely traditional or full-service brokers and discount brokers. Here are what these two kinds of brokers stand for and the different functions they play.

In our last two posts, we discussed some of the many roles stockbrokers play in terms of facilitating our investment in the stock market. One of our conclusions was that while the roles they perform are good, one has to be with the right broker to get the right result.

It is pertinent to note here that are different kinds of brokers and they serve slightly different purposes. Broadly, they are of two kinds namely traditional or full-service brokers and discount brokers.

Here are what these two kinds of brokers stand for and the different functions they play.

Traditional or full-service stockbrokers

These brokers are known to offer a wide array of services and products beyond facilitating trade. They are great with offering a range of advisor services based on their expertise such as making better investment decisions, financial and retirement planning, and more.

Their services are usually bespoke and tailored to the needs of investors. As a result of this, they are known to charge more fees or commissions than discount brokers.

As a newbie in the stock trading or investing world, having a guide can make your investment journey easier and more successful. Not sure you know enough about stock trading, risk management, investing strategies, or financial planning, a full-service broker is the asset you need to get on your feet.

Discount Stockbrokers

Discount brokers, unlike the full-service brokers generally offer few services and allow the investor take on a lot more work. Discount stock brokers typically allow investors to trade on their own with very little interaction.

If you would not like to spend a lot on the entire process or you would like to invest independently, having a discount broker will save you money and allow you to run things by yourself.

With a discount broker, as soon as your account is set up, he or she can allow you to do it yourself at minimal cost through their website or online platform, by phone, or in a small branch when required.

With the money you save from using a discount broker, you can purchase more shares in the stock market as well. Thanks to the advent of the internet, we now have a lot more discount brokers and, consequently, we have more opportunities to spend less money on the entire investing process.

Depending on your requirements, it is important to choose the best stockbroker at every point in time. Understand that there is a tradeoff between support and cost; you should be able to assess your investment, financial and knowledge position at every point in time before making this choice.

That said, both are simply means to your end of investing in stocks and, therefore, do not guarantee any specific outcome.

Written by Lawretta Egba