Brokerage Dealers Basics

Learn the basics about brokerage dealers for successful investing

If your business is ready to invest in securities, you might want to contact brokerage houses to complete the deal. Brokerage firms sell individual securities, typically from a list of securities they represents. Brokerage dealers are salespeople who make recommendations to clients and assist in completing transactions. They receive a commission based on each stock transaction they complete, that is, they are paid for making the sale.

Stock brokerage firms are required to profile clients to make sure their recommendations are in the best interest of and appropriate to the client's goals. However, once the transaction is complete, they have no legal responsibility to monitor the account or make further suggestions. That duty will fall to your financial department. As your firm looks for a broker, keep the following points in mind:

1. Brokerage companies come in all shapes and sizes, including online and discount firms.

2. Full-service brokerage houses differ significantly from discount brokers.

3. It's important to retain the services of reputable brokerage firms.

 

Research stock brokerage firms

There are a myriad of brokerage firms: full-service, discount and online only. All sell a variety of investment products: stocks, bonds, annuities and other investment vehicles. Some are national; others are local. Some are an independent broker; others have dozens of agents.
Try: Review the article on Kipplinger.com to get brokerage dealers basics. Knowing the differences between brokerage houses can help your firm make the best choice of brokers. Investing Online and provides detailed information about brokerage houses.

Find brokerage houses to help attain your firm's investment goals

A business that wants a broker who does the research, makes recommendations and finalizes the sale, wants a full-service broker dealer. Commissions at full-service houses reflect the costs of the additional investment services. A business with a financial investment department to provide those services can save significantly with a discount broker dealer.
Try: Check the websites of online and discount stock brokerage firms such Scottrade, E*Trade and TD Ameritrade. Compare offers on free transactions, guaranteed low fees or low-cost options trading. If you're still unsure, call them for further information or scan the Internet for additional choices.

Check the professional background of your broker

While not held to the same fiduciary standards as investment advisers, brokers are regulated by federal and state laws as well as groups such as the National Association of Securities Dealers. Take the time to check your brokerage firm's track record with these groups before investing.
Try: Use BrokerCheck at FIRNA, the Financial Industry Regulation Authority, to assess the background of your brokerage service. Check state compliance at the NASAA (North American Sectaries Administration) website.

 

• Most stock brokerage houses are registered as brokers and investment advisers. If you decide your company wants to change its strategy, those firms can accommodate your needs.

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