What is a Broker?

A broker is a person or platform that executes buy and sell orders on your behalf. You cannot walk up to a stock exchange and buy shares directly. You need a broker to act as your intermediary, routing your orders to the market and holding your investments on your behalf.

What types of brokers exist?

There are two broad categories. Full-service brokers offer personalised advice, portfolio management, and financial planning. They charge higher fees in exchange for that guidance. Discount brokers which is what most online platforms are simply execute your orders without offering advice. They charge lower fees, sometimes nothing at all per trade.

What do modern brokers look like?

Most investors today use online brokers accessed through a website or app. Platforms like Interactive Brokers, Robinhood, Fidelity, Charles Schwab, eToro, Saxo and Trade Republic are examples of popular brokers. They allow you to open an account, deposit money, and start buying shares or funds within a few days.

How do brokers make money?

Some charge a flat fee per trade. Others charge a percentage of the transaction. Some appear free but make money through other means, such as earning interest on the cash you hold with them or through a practice called payment for order flow. It is worth understanding how your broker earns revenue.

What should you look for in a broker?

Regulation matters most. Make sure your broker is licensed and supervised by a recognised authority. Beyond that, consider fees, the range of available investments, the quality of the platform, and how your assets are protected if the broker goes under.