Brokerage Firm

Brokerage firms are licensed to buy and sell securities for clients and for their own accounts. Brokerage firms provide individual investors their link to the financial markets by employing brokers who carry out the investor’s order to buy or sell securities.

The firm may be a huge, corporation with hundreds of brokers, a small partnership with only one broker or any size in between. A brokerage firm could also be a full-service firm, a discount firm or somewhere in between. Typically, larger firms, and full-service firms, provide an increasing range of financial services, including financial planning, asset management, and educational programs. In addition, many maintain research departments for their own and their clients’ benefit. Other brokerage firms, such as online firms and discount firms, are increasingly providing their customers with a wealth of investment information on their websites and encouraging their customers to trade electronically.

An investor should note that while online and discount brokerage firms may charge lower commissions than full-service brokerage firms to execute their buy and sell orders, those firms are also less likely to provide the range of services mentioned above. This may not be an issue for many investors as extensive information and online account access are now readily available. The individual investors’ needs will dictate which services will be required.