The general term "broker" refers to an individual or firm that charges clients a commission for assisting in the buying and selling of products. In the financial market, those products can include stocks and bonds, insurance products and real estate. Each industry has its own brokers, and services can vary among brokers within the same industry.
Full-Service Investment Broker
Full-service brokers charge the highest commissions due to the breadth of services they offer, and they work best for those seeking detailed assistance in choosing and planning purchases of investments. A full-service brokerage firm can have an entire division of research analysts to help investors choose portfolio products. The client's broker can make direct purchases for the client, actively manage a portfolio, and help choose and organize retirement accounts. Clients should conduct interviews when considering a full-service broker and check that the broker has a proven history, references and the appropriate services for the client's needs.
Discount Investment Broker
Discount brokers simply buy and sell investment products on the client's behalf. The brokers charge lower commissions than the full-service firms but also don't offer much help in choosing products. Discount brokers work best for investors who already have a firm grasp on market accounts, including how to conduct independent research. Clients choosing a discount broker need to compare minimum investment requirements and the price for trading, which can prove high for investors making frequent trades.
Insurance brokers differ from agents in that the broker works for the client rather than for a particular insurance company. Brokers assist clients in examining a wide range of insurance policies to find the best fit. Policies can include health coverage, life insurance or other needed insurance products. Licensing requirements vary among states but typically include an examination certifying expertise in the types of insurance the broker plans to cover.
Real Estate Broker
Real estate brokers can assist a client in buying, selling or renting a property. These brokers differ from other types due to the ability to act on behalf of a buyer or seller. Real estate brokers often act as an intermediary between the buyer or seller and can in certain circumstances act on behalf of both parties. Licensing varies among states but often requires some proof of college coursework and a certification exam.
- The Free Dictionary: Full-Service Broker
- The Free Dictionary: Discount Broker
- The Free Dictionary: Insurance Broker
- New York State: Department of Financial Services - Applying for Broker/Agent License
- The Free Dictionary: Real Estate Broker
- California Department of Consumer Affairs: Bureau of Real Estate - Requirements to Apply for a Real Estate Broker License