---
title: "Stock Brokers and Investment Brokers"
description: "What do investment brokers do? What is a stock broker? What do these brokers offer regular investors?"
canonical_url: https://trendshare.org/how-to-invest/stock-brokers-and-investment-brokers
markdown_url: https://trendshare.org/ai/stock-brokers-and-investment-brokers.md
published: 2012-10-02
last_updated: 2016-07-04
content_license: https://trendshare.org/about/disclaimer
---
# Stock Brokers and Investment Brokers

Source: https://trendshare.org/how-to-invest/stock-brokers-and-investment-brokers
Updated: 2016-07-04
For all of the bluster about self-directed investment, all the talk that
it's easy to find great stocks and buy them at the right prices, most investors
need at least a little help from others. Few investors place orders on their
own. Almost no one can call up a great company and offer to pay $1000 for ten
shares of stock. Even Warren Buffett or Carlos Slim Helú spends time
negotiating, often with layers of professionals.

At any point in time, there might be thousands of people willing to sell a
stock and thousands of people willing to buy. How do you put all of these
people together? How do they negotiate a price? Do you need a broker to buy
stocks? You need some sort of intermediary—generally markets, exchanges,
and brokers.

## What is a Stock Broker? What is an Investment Broker?

In the current jargon, a stock broker is an organization which employs
people who carry out investments. The person who helps you buy and sell
investments is an investment broker or a registered representative or a
financial advisor.

An investment broker is a person who helps you buy and sell investments.
These don't necessarily have to be stocks—they can be bonds, real estate,
futures, options, and other investments.

## Duties of Investment Brokers, Reps, and Advisors

The bare minimum a stock or investment broker must do is help you buy or
sell securities (stocks, funds, bonds, options, futures, or other securities).
That's it.

A broker *may* provide additional services, such as doing research,
offering advice, or answering questions. These questions can range from "How
much should I pay for a share of [McDonald's](/stocks/MCD/view)?" to
"What are the tax implications of buying municipal bonds?" to "What's with the
sugar cane harvest in Brazil this year anyhow?" This advice is not free.
Sometimes it's worth the money. Sometimes it's not.

Brokers must follow [specific regulations of the SEC](http://www.sec.gov/rules/other/2013/34-69013.pdf) (PDF link; kind of dull reading) that attempt to ensure that they
keep your best financial interests in mind. That's not exactly a master class
in how to be a good stock broker; think of it as the bare minimum required to
be a responsible broker.

## What is a Brokerage Firm?

Most brokers don't work alone. A brokerage firm is a company which employs
brokers for the purpose of investing for their clients. A brokerage firm has
more leverage than an individual broker due to its size. They can pool their
orders, for example, to execute fewer and larger trades by serving as a
mediator between their own clients.

Are these terms confusing yet? Many people use the word "broker" to refer to
"brokerage".

## Do You Need a Broker to Invest?

Before the Internet was available to the general public, the easiest way to
buy or sell a stock was to call a stock broker at a brokerage on the telephone.
You'd get a call or letter the next day telling you about your transaction.

With the Internet, it's much easier to buy or sell without ever talking to a
human being. Of course, now a brokerage has to hire fewer brokers and its costs
are lower. Several new brokerages started the trend of offering fewer services
at deeply discounted costs: for example, buying or selling for a flat fee of
$10 or less without requiring you to speak to anyone, make a call, send a
letter, do anything other than indicate your intent.

Generally these days, "discount brokerage" and "online brokerage" refer to
the same thing. If you read an investing book from even twenty years ago, you
may find the terms a little outdated.

If you don't *need* guidance on your trades, you can minimize your
costs by [using a discount broker](https://trendshare.org/how-to-invest/what-is-a-discount-stock-broker).
Of course, many of these brokerages also offer premium services such as paid
financial advice, but you can use that only if you need it. This is the easiest
way to buy stock and the easiest way to sell stock shares: go to a website,
click a few buttons, and you're done. Alternately get the mobile app and keep
your phone/tablet/phablet out of the hands of toddlers.

The Internet has also provided much more accurate and available information
on companies and their stocks: you can get news as it happens to help you make
good decisions. Now you can get opinions as they happen to tempt you to make
frequent and rash decisions. You don't have to wait days for stock broker
advice.

Wise investors are patient. There's no need to rush. Take advantage of the
wonderful opportunities the Internet provides (discount brokers, copious
research), but [wait for the right time to buy great companies at good prices](https://trendshare.org/how-to-invest/when-is-the-right-time-to-buy-a-stock). You don't need anyone
telling you what to do; you are in charge of your own investments.