How Can a Broker Help You?

A broker
Taking your first steps in the investment world can be a daunting prospect. Once you’ve got some disposable income in your pocket, you must be careful with your hard-earned money. You’ll likely hear family members and friends tell you to invest in some financial securities or other asset classes. While that’s prudent advice, you can’t blindly invest without first researching and doing due diligence.

Unfortunately, the world of financial securities and asset classes is complex and intricate. It’ll take constant learning to understand how these assets and markets work. In addition, you’ll soon learn that some securities, like stocks, require you to work with a broker.

Although working with a broker isn’t always necessary, you’ll need a broker in some cases. Let’s assume you want to invest in stocks. Some companies on the stock exchange will offer direct stock plans. These enable you to purchase shares straight from the company without requiring an intermediary. However, that’s not the case for all listed companies. You’ll need a broker in such cases.

Before you select a broker, you’ll want to learn what they do and, more importantly, how they can assist you.

What is a Broker?

A broker is an individual or company that lets you purchase and sell securities, like stock. Many companies don’t have direct stock plans, meaning you’ll need to work with a broker to purchase their shares. Brokers usually hold certifications from the SEC or other relevant bodies. These certifications allow them to sell and buy assets on your behalf.

However, that’s not all. Brokers may also offer other services, like financial planning, retirement planning, and portfolio management based on your chosen brokerage. You’ll want to learn more about full-service and discount brokerages.

How Can a Broker Help You?

Here’s how a broker can help you:

Counsel and Recommendations Based on Due Diligence and Research

Full-service brokerages usually have numerous financial experts. These experts will research the market and perform due diligence to give you the best financial and investment advice possible based on your investment goals. After all, these brokerages want to retain you as a long-term client. Working with a brokerage can help you achieve your financial goals more quickly.

An Ongoing Relationship

Many investors often prefer staying with their brokerage firm because of the ongoing relationship they develop. A full-service brokerage offers personalized advice based on your investment goals. They’ll also manage your portfolio for you. In addition, these brokerages also provide retirement planning help. Naturally, investors place trust in them. Over time, this leads to a meaningful relationship because investors receive one-on-one dialogue from them. If that’s something you value, a broker can help you.

Accessibility

Working with a broker opens up new investment opportunities for retail investors. You can invest in stocks from companies that don’t offer direct stock plans. Many brokers can also help you purchase and sell other securities, like commodities and exchange funds.

Simplicity

A broker also simplifies the buying and selling process for retail investors. They’ll usually keep tabs on your interest earnings for tax reasons. If you work with a full-service brokerage, they’ll also provide you with personalized financial advice to help you achieve your investment goals quicker.

A broker at a full-service brokerage

Learn More About Brokers with Francisco J. Faraco

Francisco Faraco is a CFA Charterholder. He’s also a Teaching Assistant in the Master of Science in Financial Mathematics at the University of Chicago. He immigrated to the United States from Venezuela in 1999. Faraco has been a resident of New York for the past twelve years.

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