What is an online broker?

30.3.2020 | 13:00

executive-511706_640A broker, or rather brokers, can be defined as an individual(s) or a firm that seeks to handle buying and selling of orders on behalf of other firms at an agreed fee. From an individual perspective, brokers assist in both the handling, purchasing, and delivery of goods requested at a specific commission. Most brokers have a perfect knowledge of the market and can buy or sell products on behalf of their clients at a reduced price. However, brokers are regulated by the government. They are required to register with the Financial Industry Regulatory Authority -(FINRA) to help serve their clients legitimately and in a satisfactory manner. The statutory body addresses the necessary steps a broker should follow to know their customers. Customer knowledge is in terms of establishing their clients, their needs, and how to satisfy them at the best price in the market.

What brokers ask customers when opening an account

euro-1562806_960_720-300x212However, clients should be ready to give their brokers a substantial commission for their services. Brokers should take a step and make sure that they are aware of their clients’ current financial status to identify if they have the required funds to make the transaction. This will help the broker identify the market to venture in and how to cut down costs through mastered arts such as bargaining. Brokers are also required to be aware of their clients’ current tax status. This will help in making sure that the client has understood the tax cuts that come with the transaction they are about to undertake. It also helps to ensure that the particular transaction is legal and is in line with all stipulated processes and requirements issued by the government. Brokers also take part in other services offered by their firms, such as cross-selling.

Some of the leading firms also offer a chance for brokers to conduct what is known as client offering. This allows brokers to effectively provide tailored solutions as per the order specifics required by the client. However, there is a big difference between brokers and investment advisors. This is especially seen in the different firms that they register in. Brokers are required to register under FINRA.

On the other hand, investment advisors are required to register under the security and exchange commission and become an official registered investment advisor. There are many types of brokers in the market. One of them is the discount broker. This type of brokers can handle a wide range of orders for their clients but at a reduced commission compared to other brokers.

Competition between brokers

This creates stiff competition between brokers as they strive to improve the quality of their output. Some full-service brokers have professionalized the industry by providing holistic services to their clients that include retirement planning, market research, and of course, investment advice. Real estate brokers are also key players in the economy. They are registered and licensed as real estate professionals that represent the owner of the property on sale or lease. Real estate brokers also have the duty of listing and advertising the different offers available. That’s why users should do a comparison and read reviews on the web (Plus500 review, XTB Review)


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