Investment Broker
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
An investment broker acts as an intermediary between buyers and sellers of investments. Investment brokerage requires a license. Buyers and sellers instruct their investment brokers to execute trades on their behalf and in return they pay their broker a commission. Some of the most famous investment brokerage firms are Charles Schwab, Smith Barney and Merrill Lynch.
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Types of Investment Brokers
Investment brokers are classified into the following types:
An investment broker acts as an intermediary between buyers and sellers of investments. Investment brokerage requires a license. Buyers and sellers instruct their investment brokers to execute trades on their behalf and in return they pay their broker a commission. Some of the most famous investment brokerage firms are Charles Schwab, Smith Barney and Merrill Lynch.
Types of Investment Brokers
Investment brokers are classified into the following types:
Discount Brokers: They trade on behalf of buyers and sellers without offering any investment advice. Scottrade, TD Ameritrade and Charles Schwab are some of the famous discount brokers.
Full Service Brokers: They offer consultation on buying and selling as well as on the allocation of investment money.
Deep Discount Brokers: They charge a meager commission and provide limited services. They do not offer consultation.
Prime Brokers: Apart from executing trade on behalf of buyers and sellers, Prime Brokers also provide a fuller range of services for hedge funds, including back office support, financing, recordkeeping and trade reconciliation.
Online Brokers: There are several online trading platforms that offer varied services, including consultation, portfolio management and market insights.
How to Choose an Investment Broker?
The following tips can help you choose an investment broker:
Trading Over the Internet: Leverage the Internet to trade via brokers. Online trading is a much cheaper option that doing the same via the phone or in person. The cost of trading over the Internet typically ranges from $7 to $15, whereas it couldrange between $25 and $100 in case of trading in person or over the phone.
Expenses Associated with Additional Advice: One should choose a broker who does not charge a huge fee for additional advice. A number of investment brokerage firms charge exorbitantly for conducting additional research or providing extra advice.
What the Broker Offers: All brokerage firms deal in basic securities, including buying and selling stocks and bonds on behalf of their clients. Many firms offer individual retirement accounts (IRAs), mutual funds and annuities. Some brokers execute orders for additional investment products, such as options and futures contracts.
Open Demo Accounts: Instead of jumping into full-fledged trading, one could begin with opening a demo account. During this time, ask a lot of questions to get familiar with the broker and the trading process. This would allow you to get a feel of the customer service support different brokers offer.
