what is a broker 
a broker is an individual or firm that acts as an intermediary between an investor and a securities exchange a stockbroker buys and sell stocks among other securities on behalf of investors because securities exchanges only accept orders from individuals or firms who are members of that exchange individual traders and investors need the services of exchange members brokers provide that service and are compensated in various ways either through commissions fees or through being paid by the exchange itself investopedia regularly reviews all the top brokers and maintains a list of the best online brokers and trading platforms to help investors decide what broker is best for them investopedia candra huffunderstanding brokersas well as executing client orders brokers may provide investors with research investment plans and market intelligence 1 they may also cross sell other financial products and services that their brokerage firm offers such as access to a private client offering that provides tailored solutions to high net worth clients in the past only the wealthy could afford a broker and access the stock market however online brokering triggered an explosion of discount brokers which allow investors to trade at a lower cost but without personalized advice discount vs full service brokersdiscount brokers can execute many types of trades on behalf of a client for which they charge little or no commission for trades their low fee structure is based on volume and lower costs they don t offer investment advice and brokers usually receive a salary rather than a commission most discount brokers offer an online trading platform that attracts a growing number of self directed investors such services usually charge 0 in commissions full service brokers offer a variety of services including market research investment advice and retirement planning on top of a full range of investment products for that investors can expect to pay higher commissions for their trades brokers receive compensation from their brokerage firm based on their trading volume as well as for the sale of investment products an increasing number of brokers offer fee based investment products such as managed investment accounts real estate brokersin the real estate industry a broker is a licensed real estate professional who typically represents the seller of a property a broker s duties when working for a seller may include it is not uncommon to have a real estate broker work for a buyer also in which case the broker is responsible for broker regulationsecurities brokers register with the financial industry regulatory authority finra the broker dealers self regulatory body in serving their clients brokers are held to a standard of conduct based on the suitability rule which requires there be reasonable grounds for recommending a specific product or investment the second part of the rule commonly referred to as know your client or kyc addresses the steps a broker must use to identify their client and their savings goals which helps them establish the reasonable grounds for their recommendations this standard of conduct differs significantly from the standard applied to financial advisors registered with the securities and exchange commission sec as registered investment advisors rias under the investment advisers act of 1940 rias are held to a strict fiduciary standard to always act in the best interest of the client while providing full disclosure of their fees real estate brokers in the u s are licensed by each state not by the federal government each state has its own laws defining the types of relationships that can exist between clients and brokers and the duties of brokers to clients and members of the public 2a securities broker must make a reasonable effort to obtain information on the customer s financial status tax status investment objectives and other information used in making a recommendation examples of brokersfull service brokers tend to use their role at a brokerage as an ancillary service available to high net worth clients along with many other services such as retirement planning or asset management examples of a full service broker might include offerings from a company such as morgan stanley goldman sachs or bank of america merrill lynch the larger brokerage firms tend to carry an inventory of shares available for sale to their customers they do this to help reduce costs from exchange fees but also because it allows them to offer rapid access to popularly held stocks other full service broker firms are actually agency brokers this means that unlike many larger brokers they carry no inventory of shares but act as agents for their clients to get the best trade executions an example of this would be if a high net worth investor named amy wanted to place a large buy order for tesla inc tsla stock amy would call or message her broker telling them to execute the buy order of say 10 000 shares this is an order of more than 1 million so amy feels more comfortable having a broker execute the trade directly the broker receives the order and if the brokerage has those shares available they will most likely fill amy s order immediately if it doesn t it could buy those shares on the exchanges or from other brokerages they may not place the order in the amount of 10 000 grabbing instead 500 to 1 000 shares at a time to deliver to amy after the funds settle 