Stockbroker
A stockbroker is licensed, and has direct access to trade stocks or derivatives on your behalf. They act as your agent for which a fee is charged. A stockbroker may also offer a range of other services including the provision of advice on which security to buy or sell.
Types of stockbrokers
There are two main types of stockbroker. The main difference between them is whether they offer advice or not. The major types of brokers are:
- Full service (advisory) stockbrokers
- Non-advisory stockbrokers
Full service stockbrokers
Full service brokers offer advice on buying and selling stocks, make recommendations and provide research. They also offer other investments such as options, warrants, futures, bonds and compile tailored investment plans. As full service brokers offer advice and other services, you generally pay a higher brokerage fee to transact a trade. Non-advisory stockbrokers
As the name suggests, non advisory brokers offer no recommendations or advice regarding the appropriateness of your decision, consequently their brokerage fees tend to be lower than a full service stockbroker. This is an attractive option for investors confident in their sharemarket knowledge and trading decisions. Telephone based non-advisory
A phone non-advisory stockbroker will act on your telephone instructions to execute an order on your behalf. Internet based non-advisory
An internet non-advisory stockbroker will execute an order that you have placed over their internet site by entering it into the trading system. The lower overhead costs of this service frequently mean that the brokerage fee is lower.
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