Opting for Discount Brokers

What the availability of discount brokers has done is make the market for investing more accessible to one and all. The discount broker operates by providing just the lowest level of services to those who want them. They make available a platform to carry out the transaction and services that would be needed to complete that transaction. Discount brokers do not offer the client any advice and just acts as a middle man to ensure that the desired sales and purchases of stocks and other financial instruments are carried out for the client. Discount broking, as a result, has become quite popular now.

Discount Broker vs. Full Service Broker

In the simplest definition, a full service broker offers the client the facilities to carry out their desired transactions as well as research, advice, various tax tips, and retirement planning as their services. However, the commission charged is higher than that of a discount broker. Discount brokers generally offer services to people who wish to trade on their own without the need of any other advice and they charge minimum brokerage for their services.

The advantages of discount brokers, apart from the very low charges, like in that they are the best option for various intraday traders. Moreover, they also offer various options so that you can select the desired plan as per the requirements you may have at that point. However, discount brokers do not have the services of having offline branches in every city that the client can visit to place their trades. On the other hand, the client would have to contact the customer care number for any queries they may have.

Full service brokers, on the other hand, provide relationship managers and various other services like advice to their clients. They also have huge branch networks, meaning that the client can go into the nearest branch to place their trade. However, the brokerage is generally very high and non-negotiable unless you have a proven record of high trading volume.

Why Choose a Discount Broker

Quality of service is not always determined by just the amount of money you pay to get it. As such, it is a good idea to choose a discount broker because of the following:

  • When you pay money to a discount broker, you can be assured that the major part of it is spent on trade execution. In full service brokerage firms, a lot of the money goes towards other expenses like advertising and operational costs. This means that discount brokers help save on trading fees as well as increase the amount of money spent on actual trade execution
  • Since many full service brokerage firms also prefer outsourcing their trade execution, it may come to be that your discount broker also uses the same third party services and platform in the end.
  • Discount brokers also provide access to various resources and research, only at an added cost. The data and analysis software, however, may be accessed at a lower rate than with a full service broker.

Opting for Discount Brokers Opting for Discount Brokers Reviewed by Sandeep malik on 23:00 Rating: 5

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