What does a stockbroker do?
Stockbrokers buy and sell shares on behalf of their clients. There are several different levels of service a stockbroker can provide though, with the choice of provider dependant on how much control the client wants over which shares they trade:
- Execution-only stockbrokers will complete orders on their client's behalf, but do not offer any advice
- Advisory stockbrokers will offer advice on which shares to buy and sell, but only act on orders submitted by clients
- Discretionary stockbrokers will trade on behalf of their clients, executing trades without their input
Most stockbrokers will trade shares both on exchange and over-the-counter, dependant on where they can find the best price and liquidity. They'll charge a commission for executing trades, or a fee for retaining their services — or sometimes both. This is often a percentage of the customer’s purchase, although some brokers will ask for a flat rate.
There are other types of brokers, such as commodities brokers and forex brokers.