Brokerage Dealers Key Terms

Key terms define relationships with stock brokerage firms

Your company can invest in the stock market in several ways: with brokerage firms, investment advisers or on its own. Unless your firm has a finance department to manage the company's portfolio, the first two options seem to make the most sense. However, there are quite a few technical terms related to stock investing, so a smart investor takes the time to learn the definitions.

Knowing the differences between brokerage dealers and investment advisers is important as your business plans its investment strategy. So are the meanings of various investment types, such as securities, options and futures.

 

Learn the difference between brokers and investment advisers

How involved in upfront research your company wants to be will determine whether it uses a broker or investment adviser. A broker dealer will review company strategy, complete requested transactions and turn the management of the portfolio over to your company's staff. An investment adviser has a fiduciary responsibility to continue to oversee the investment.
Try: To understand the distinctions between brokerage dealers and investment advisers, review the information at OverRegd. It provides specific definitions and includes information on legal obligations. See InvestorWords.com for a simple definition of broker dealer and related terms. Use the guide at the bottom of the page to find the definitions of other words.

Find explanations of key investment brokerage terms

Your business can invest in the market in a number of ways. It can buy shares of stock or mutual funds, take out options or purchase futures. Or any combination of these. Buying a share of stock invests your company's money directly in a specific company, while a mutual fund bundles your money with money from other investors. Buying an option gives you the right to buy or sell holdings at a specific price at a given time. Buying futures also guarantees prices based on time.
Try: Investopedia has a complete glossary of terms related to brokerage companies and the stock market. Scan the glossary at TheStreet.com for information about online brokerage firms and the complete array of investment terms.

Review information about the regulation of stock brokerage firms

Transactions and client relationships with brokerage companies are regulated. An excellent source for understanding key terms related to brokers and the laws that apply to them are regulatory agencies.
Try: Check the comprehensive glossary at FINRA (Financial Industry Regulatory Authority). It contains hundreds of terms related to stock brokerage firms. Study the information at Seclaw.com. It gives practical explanations for the key terms related to brokerage houses.

 

• Taking a course is perhaps the best way to develop a working knowledge of key terms about investment brokerage. Your staff can find courses online, at local colleges or through brokerage firms.

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