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Discount Broker:
Discount brokers generally only provide the trading facility for their clients. They do not offer advisory and suits. They usually offer low brokerage, a quick interface and a user-friendly trading platform for trading in stocks, currency derivatives and commodities. Examples of discount brokers are Zerodha, Upstox, ProStocks, Trade Smart Online, Discount Broker offers the most affordable, low-cost brokerage cost for buying or selling socks. They only provide all the investors with a trading platform, but no advisory means. When a trader is using a discount broker service they don’t have the added benefit of advisory services.

In comparison with full service brokers, the discount brokerage firms’ fee charges are 60% lower. With this they also offer free online trading software to all its customers

If you are wondering about how discount brokers can charge low brokerage fees. It is possible because they run on a completely different business model than full-service broking firms. They also offer limited services at a cheaper price. They offer their services online and have a very limited physical presence which helps them save money on employees and infrastructure.

The services offered by discount broking companies do not include any research services, IPO application services, and investment services in Mutual Funds, Bonds, FDs etc. This helps them save money on resources.

Advantages of Discount Broking-
1. A distinct advantage is the lower commission charge on their services.
2. Uniformity is present in the discount brokers’ commission charged to all the traders irrespective of their transaction volume.
3. The transaction cost involved is low.

Disadvantages of Discount Broking
1. Since services are provided online, discount brokers lack a personal touch. They do have relationship managers to help and assist customers.
2. They do not report on companies or make trade calls to their clients.
3. Discount brokers do not provide any portfolio management services either.
4. Unlike the full-service brokers, they don’t offer a three-in-one account (banking + trading + Demat).

Full Service Broker:
Traditional brokers who render services such as trading, research, and advisory facility for stocks, commodities, and currency to its customers are full service brokers. These brokers charge commissions on every trade executed by their clients. Full service brokers also facilitate investing in Forex, Mutual Funds, IPOs, FDs, Bonds, and Insurance. Full service broker provides trading, research and advisory facilities in stock, commodities, Mutual funds, IPOs, insurance, etc. Unlike discount brokers, they operate from many offices and branches across the country, which clients can visit in case of any query. Full service brokers are client-dedicated relationship managers, advisory, customized support, portfolio management services, financial planning services, and services relating to wealth management. The commission that is charged by the full-service broker is comparatively higher than the Discount broker because they offer a wide range of services for their traders, advisory makes up an important part of their cost. The full-service broker provides Fundamental and technical reports of the companies.

Pros of Full-Service Brokerage Services
1. They provide various wider geographic exposure.
2. They also provide their clients with dedicated relationship managers who help and guide them in realizing their investment needs.

Cons to Full-service Brokerage Services
1. A higher commission is charged compared to the discount brokers because of the wide range of services that are offered. This is a drawback because with online broking available at cheaper prices, people come to full-service broking for specific purposes only.
2. The transaction costs are usually high in full-service broking.

Discount Brokerage VS full service broker –
A discount brokerage account is opted for if a trader is looking to learn how to invest and trade by yourself, or already has the required experience to make moves with their own decisions. Given that a trader is doing his trading solo, a discount brokerage account has very low and limited fees such as transaction and AMC charges, which are kept to a fee as minimum as possible. By opting for this you can use your own experience for making trading decisions and personal expertise to save on paying for any additional charges or fees. On the other hand, Full service brokers, in addition to offering you in order to trade providing you with the trading platform and trading account, also offer valuable advisory services on how to invest and where to invest on what basis to invest this of course is trade-off, of course, is the increase in fees you pay, as you have to pay for the professional portfolio management done by the full service broker for your investments’

Difference between discount broker vs. full-service broker
– A low fee is charged by discount brokers and they also help and render service to traders who have relatively smaller capital to trade with when compared to traders who have a sufficient amount of capital who go for full-service brokers

– Full-service brokers provide a whole host of services like research on trending topics, sectorial and stock research, and tax planning, etc.

– Discount brokerage clients are self-directed and very active traders. Therefore, the services are also centred on helping such investors monitor movements regularly. Like providing them with chart indicators.

– Unlike discount brokerages, Full-service brokerages have physical branches at various locations and provide both online and offline services.

– The transaction cost that is charged by a full-service brokerage is higher when compared to the cost that is charged by discount brokerages. This occurs due to a wide range of differences between the services they render.

– Full-service brokerages have been in trend for ages, and hence for traditional traders, they may find the trading experience with full service brokers far more convenient than discount brokerages. However, since the needs of different traders vary, an individual trader has completely different needs from another trader there requirements always vary easily so for the younger new-generation of traders could have completely different requirements.

Difference between discount brokers vs. full-service brokers and which to choose
Investors/ traders that have a huge capital to invest can easily afford to pay for professional investment advisory services and are typically much more cautious and mature. Hence, for them the most suited option will be full-service brokers, so they naturally opt for the option that fulfils their needs better. Such investors/traders are long-term players and they do not frequent the market as much. A high net worth (HNI) is highly unlikely to go into the markets without a plan and sound knowledge, because a lot is at stake.

On the other hand, investors with a small amount of capital and smaller portfolio, will not find it logical or justified in any way to pay for financial advice, which can reduce a considerable amount paid for charges out of their returns. These traders naturally have to frequent the market more and require brokers to place buy and sell orders much more often. Hence, they cannot benefit from full service brokers so they will but obviously opt for a much more beneficial option for them that is discount brokers who offer lower commissions discount brokers charge.

The experience and knowledge level of a trader matters a lot in what preference they will have as a veteran trader/ investor or as a beginner in the investment journey in the market. Veteran investors with large amounts of capital to invest might also choose a discount broker as they have earned a better understanding of the market through their experience. However, it is still very rare for this to happen. It is an uncommon occurrence. It mostly depends on your requirements and the size of the capital which you are ready to risk for profit and want to invest and earn profits on while calculating the risk.
How to decide between a Discount broker and Full service broker:
1. If you don’t have a large amount of capital to invest in the stock market and can’t afford to incur losses or many charges and cannot spend large amounts on fees and commissions.

2. You enjoy doing your own research and make your own investing decision to earn profit

3. You are quick and efficient at learning how to use different tools and resources to get the insight you need to make smart decisions with your money.

4. Savings on paying brokerage is profit- Why would you pay a higher brokerage to a full-service broker when you don’t require any research report and advisory services. Instead save money on brokerage and it automatically adds on to the profit.

5. If you fit into all of the above categories, Discount broker is definitely the one for you!

Making uninformed trading decisions results in losses
The low brokerage fee of a bargain broker won’t assist much if you don’t have the time or the knowledge to choose stocks because bad trading decisions can lead to considerably bigger losses.So a full service broker might be more beneficial in this particular case.

Which one should you opt for? Full Service Broker or Discount Broker?
After doing the above in-depth detailed analysis about the two types of stock brokers, we have arrived at the conclusion that both of them have their individual advantages and disadvantages. It depends upon the investor.

For an amateur investor who has just begun his trading/ investment journey or someone who wishes to explore the possibilities of the market it is advised to choose a traditional full service broker as they provide advisory services which aids them in understanding the market and making better investment decisions.

On the other hand, someone who is an expert or has trading experience should opt for Discount Broker and make the most of the low brokerage charges and save profits on low brokerage charges. It will help investors save a lot as compared to full service brokers and eventually increase the overall profit.

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