Middlemen in any service, consultancy, or business are sometimes considered as a hinder to cost or execution. Sometimes, they work as a catalyst, while other times they don’t work out. But, there are a few places where there is a need for a middleman. The stock market is one of them. The middlemen of the stock markets are called broker
To invest or trade in the share market, an investor requires the mediation of a broker. They are intermediary people or firms who facilitate the execution of financial transactions on behalf of investors. However, they can execute the trade with the investor’s consent. There are multiple types of brokers. Two popular types of brokers are Discount brokers and full-service brokers.
This article illuminates the full-service broker definition, their importance and how they work.
A full-service broker?
As the name signifies, full-service brokers provide various services as add-ons to stock trading and investments. They are authorized firms for providing these services. The additional services include advisory, research, retirement planning, tax planning, estate planning, etc.
Full-service brokers are particularly suitable for novice investors, who require guidance in each step in their investment journey. Additionally, investors who cannot stay up-to-date with the market changes prefer full-service brokers. Full-service brokers are also preferred by those investors who find it convenient to trade and invest by visiting offline branches. Full-service brokers also provide free call and trade facilities, which most discount brokers provide on a paid basis.
The full-service broker firms started offering a smooth transaction experience and convenience through a 3-in-1 account. This account is a combination of a saving account, demat account, and trading account. Most full-service brokers also facilitate basket orders which allows an investor to club multiple orders for the same or different kinds of securities in one attempt. Some of the brokers also enable UPI transactions, wishlist facilities, international trading facilities, and so on.
Full-service brokers generally charge 0.3% to 0.5% for every trade. Most full-service brokers have their physical offices in major cities from where clients can solve their queries. They have online platforms too, from where the investors can easily invest and trade. IIFL Securities is an example of a full-service broker.
Additional benefits of full service
The full-service brokers provide some additional benefits as compared to discount brokers:
Personalized recommendation
A full-service broker analyzes the preferences of a client, regarding investments, by interacting with them. According to the financial goals of the clients, the broker suggests suitable financial instruments and specific investments. Investors are more likely to make the right investment decisions with having a full-service broker.
In-depth research and reports
A full-service broker does in-depth market research and provides their clients with detailed reports. Their research proves to be more reliable because of their expertise and experience. Researching on your own may take a longer time and is complex. The full-service broker solves this issue.
Access to various financial products
The clients of full-service brokers can have access to a large number of financial products such as mutual funds, ETFs, loans, debt instruments, preference shares, senior notes, etc. Thus, their access is not limited to equity stocks.
How does a full-service broker work?
The role of a full-service broker is not confined only to placing buy and sell orders for clients. A full-service broker provides clients with personalized financial planning. The umbrella of financial planning covers investment and wealth management, tax planning, retirement planning, real estate planning, and risk management.
The full-service broker provides their client with a relationship manager. The relationship manager first analyzes the investor profile and assists them as per their risk, return, and time preference for making an investment decision. According to an investors’ financial goals, a broker offers them a plethora of investment options apart from stocks, such as mutual funds, debt instruments, loans, insurance, IPO, FPO, etc. They do market research and provide detailed reports to aid their clients in making investment decisions.
Full-service brokers have physical branches for their clients. Some of the full-service brokers have their own banking and Demat account services as well.
To sum up, the full-service broker provides investors with additional services but at a higher commission charge. The decision on whether to go with a full-service broker or not solely depends on the need and preference of an individual. The broker helps you by providing the right advice at the right time. If you, as an investor, are ready to pay a commission in exchange for time-saving, you can consider going with a full-service broker.
