­Brokers & Their Brokerage

With the evolution of time, the risks faced by the economy is increasing and the market is becoming more volatile. The increased risk results in mounting demand for a stable income source or another source

With the evolution of time, the risks faced by the economy is increasing and the market is becoming more volatile. The increased risk results in mounting demand for a stable income source or another source of income Brokerage. Investing in the share markets or capital markets seem to be most appropriate for investing. Anybody can invest in the capital markets with the help of a broker or dealer.

The investment world includes many players namely Brokerage firms, broker, dealer, speculator, trader, hedger, etc. All of them have their own particular roles to play in the share markets but the broker is considered to be the heart of the stock market. A broker is a person who acts as an intermediary between the seller and the buyer and plays the role of a `seller to the buyer ‘and `buyer to the seller’. There is a fine line between the roles played by the broker and roles played by the dealer. Both broker and a dealer works build up their client base and invest the client’s money in the capital markets. The difference between the two is the broker looks into the client financial needs, their risk and return profile i.e. whether the client is a risk seeker or risk-averse and the returns the client demands and accordingly finds the most Felicitous investment. Wherein a dealer doesn’t see the risk and return profiles and invests in the stock which is available with him or her.

The main difference to notice here is that a broker wants to maximize the profits of his or her clients wherein the dealer wants to maximize his profits. The broker seems to be most appropriate if a person doesn’t possess significant knowledge of the capital markets. However broker works for the betterment and maximization of the profits of the clients, brokers still charge a basic fee for the services rendered. This basic fees will be charged by the brokers regardless of whether the client incurs a profit or a loss. Note that no brokerage firms or a broker stand up to the guarantee of any assured returns. Though a broker charges some extra return based on the percentage of profits whenever the returns exceed or breaches the benchmark return i.e. hurdle rate. The only thing that is the cause of a worry is that sometimes to earn an excess return and cross the hurdle rate the broker takes on too much risk which doesn’t suit the risk profile of the investor and in many cases it may devalue the investments of the clients and incur them losses.

There is a mounting growth in the search of discount brokers IndiaDiscount brokers or brokerage firms that charge a reduced commission on the transactions but typically does not provide other services. The reduced commission on the transactions will increase the profits of the clients and earn a superior return. Wisdom capital is one of the most reputed brokerage firms in India. With no commissions on the transactions and with highly skilled finance personnel with more intellectual oversight.

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