sajad torkamani

In a nutshell

A broker is an individual or firm that acts as an intermediary between investors and security exchanges who only accept orders from licensed brokers and traders.

Brokers need the approval of investors before executing a transaction and have to undergo rigorous licensing exams before they become licensed brokers.

Brokers exist in many industries such as real estate, insurance, and stocks. They are usually compensated for their services via a commission (percentage of the sale) or a fixed fee.

Types of brokers

Full-service brokers

A full-service broker/financial adviser offers both financial advice (e.g., investment advice, mortgages, pensions, tax advice, etc) and trade execution (actually executing trades on your behalf).

Discount brokers

A discount/execution-only broker only executes transactions on your behalf. They don’t offer advice/planning. As a result, they usually charge a lower commission than full-service brokers.

Examples of brokers

Other notes