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Stock Broker

It is a person that performs transactions in financial instruments on a stock market as an agent of his or her clients who are unable, unwilling, or lack the expertise to trade for themselves. Titles associated with this role include financial planner, financial consultant, financial advisor, Investment advisor (or investment adviser), and portfolio manager, which normally includes further training at the brokerage or firm level. The Certified Financial Planner designation offered by the American College in Pennsylvania after rigorous study and followed by an examination is considered by many to be the foremost educational step a stock broker can take.

Stockbrokers also sometimes or exclusively trade on their own behalf, as a principal, speculating that a share or other financial instrument will increase or decline in price. In such cases the term broker makes little sense and the individuals or firms trading in a principal capacity sometimes call themselves dealers, stock traders or simply traders.

Today, most of the once well-known corporate brand names including mid-sized firms such as Smith Barney have been swallowed up by global financial conglomerates. Discount brokers (such as E-Trade, Scottrade, and Ameritrade) have taken a large share of the business by offering highly discounted commissions, but the companies do not offer investment advice in return--all they do is execute order.

Using a stock broker for active management of a Stock/Mutual Fund Portfolio is totally unnecessary when a passive management alternative is available for long term investing within the confines of a Tax-Sheltered Retirement Accounts. However, many prefer to use and pay for the services of a broker because they feel more comfortable making decisions about their finances with the interactive guidance of a licensed advisor.

When using a stock broker for financial guidance, one must be made aware that they do get paid on a commission, based on the stock/mutual fund they sell be it from the following: Class Distinction/ Operating Expense Fees/ Services Fees/ Shareholder Fees. Thus a conflict of interest arises concerning a stock brokre who offers his/her service as a financial planner, because their revenue is generated as a direct result of your investment in the stock/mutual fund that they broker to you. Thus your return on investment is not as great, and the advice they give you might not be in your best interest. However, some mutual funds and stocks can only be purchased through a broker: in such cases their services are required to purchase the financial instrument in question.

Famous Stockbrokers

In the United States, Philadelphia was the center of American finance during the first forty years of the new United States. In 1790, the country's first stcok exchange was founded here and Chestnut Street was home to the nation's most powerful financial institutions. However, in the 1820s a shift to New York City began and for more than one hundred and fifty years Wall Street has been synonymous with the stock brokerage business. A number of firms rose to prominence over that time with the top-ranked brokerages in the early 1950s being:

Merrill Lynch & Co. Inc.
E. F. Hutton & Co.
Bache & Co.
Paine Webber & Company
Dean Witter Co.

See also:
Stock trader
Day trading
Stock market
Prime brokerage
Retail broker

• Stock broker
• Low Cost broker
• Dividends
• Dividend reinvestment program

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• Exchange Rate
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• Futures Contract
• Futures Exchange

This article is licensed under the GNU Free Documentation License.
It uses material from the Wikipedia article "Stock Broker".