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How is discount brokerage different from the traditional brokerage system?

For any trader in the share market, the rate of brokerage and calculation for the same are very important as it is an expense for him that can lead to decrease in the profit. Choice of a right broker who can offer trades at low brokerage rate or discounted rates can help him save a good amount on every trade which over a period can generate additional profit for him. The brokerage rate varies from service provider to service provider as there are no decided rates for this in the market.

Choosing a brokerage service is quite an important decision for the investor. A broker helps in managing your portfolio and helps in executing the buying and selling of stocks. There are several brokerage services available in the market, and before making a decision, you need to explore the options well. The discount brokerage systems have emerged lately, and people are often confused how they are different from the traditional brokerage.

Here’s a look at the difference between traditional and discount brokerage system:

With traditional brokerage accounts, the investor can sell and buy stocks, mutual funds, and bonds along with exchanging the traded funds and other investment products.

  • The traditional brokerage, also known as ‘full service’ facilitates more than the simple buying and selling of the bonds and stocks.
  • The traditional brokers offer a wide range of services which include financial or retirement planning, tax advice, and management of the portfolio.
  • Usually, the traditional brokerage services come with higher fee charging 1-2% on the assets they are managing. The fee is higher due to personalized recommendations and an array of services.

While the traditional brokerage is for people who do not wish to invest on their own, a discount brokerage is better for the fee-conscious investors. Several online best discount brokers in the market offer quality services based on your requirement.

Here are some of the features of discount brokerage system:

  • While the discount brokerages might not offer investment advice for bonds and stocks, they might help you with free research or educational tools which enable you to make a wise
  • There are different types of discount brokerage services. Some will offer great investing tools but also charge more, while others will offer only basic services at the lowest fee.
  • You can explore the various discount brokerage services available online and inquire about the management fee. It is better to analyze and then take the final decision.
  • The discounted brokerage services help in executing the online trade automatically with a computerized trading system or allow you to make a call to the broker.
  • Few discount brokerage services might charge the fee annually while others might not.
  • Some discount brokerage services will ask you for a minimum opening balance and charge you if the balance falls below the specified

Thus, you can consider your specific requirements and choose a brokerage service accordingly. Explore web for more information on discount brokerage services.

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