A brokerage firm is a company that carries out buy and sell orders of stocks or other securities. They act as the middleman between companies selling stocks and individuals wishing to purchase them.
Brokers, the individuals at a brokerage who execute the sales, are salespersons. They are nearly always paid on commission. Some people like working with a full service brokerage because they get advice on how to invest and what stocks are good buys. Others prefer to conduct their own research and invest accordingly.
Self-service brokerages are discount brokerages which do not offer personal brokers, but allow individuals to buy and sell stocks and shares in some mutual funds without paying as much in fees and commissions as broker-assisted trades. These firms usually operate online and charge a flat fee per transaction, rather than a percentage commission.
For someone new to investing, a discount firm can allow inexpensive trades to get started. Someone beginning to invest may also talk to a fee-based financial planner who can help define some general investment goals before they begin investing. Then, the investor is free to use a commissioned broker or a discount brokerage to make purchases.
- office details image by .shock from Fotolia.com