Working with the right broker-dealer can be the difference between a profitable investment and a costly mistake. If the stock market is played right, your money can be earning you money. Learn a little bit about what exactly a broker-dealer is, and why you might want to think twice before settling for the first one that comes your way.
What is a Broker-Dealer?
Not to be confused with a Transfer Agent, a broker-dealer is, in essence, an agent through which individuals or entities can buy and sell stocks. In order to interact with the stock market, these individuals or entities must go through a broker-dealer who buys or sells securities for them.
Most broker-dealers are comprised of industry professionals who draw upon a wealth of experience in finance, investing, and stock market research in order to make and advise the best financial investment decisions. While that may make things easier and give you more time to build your practice, keep in mind that they will take a cut of your revenue in exchange for their services.
The U.S. Securities Regulation Parlance coined the term “broker-dealer” as a synonym for the term “stock brokerage”. Both terms refer to an entity that both trades stocks as a dealer and buys and sells stocks as a broker.
What Do They Do?
Despite the literal name, broker-dealers tend to serve as much more than just a broker and a dealer. While they can buy, sell, and trade securities for you, they can also advise on matters of buying, selling, and trading so that you can maximize your profits with expert advice.
Not everybody studied finances and economics in their education, but you shouldn’t have to have a degree in economics to be able to have fruitful investments. However, if you’d like to take the more independent route, you can become your own broker-dealer. Registering is a complex process. But if you’re determined to keep all of your revenue, it may be a worthwhile effort. In the end, however, most investors choose to work with an outside group simply to save time and stress.
What Should You Look For in a Broker-Dealer?
The first thing you’ll need to make sure of before officially getting on board with a new broker-dealer is that they are giving you a fair deal. You will be working intimately with this company and the team associated with them, so make sure the costs of buying and gains of selling stocks are in line with your expectations. What percentage of your revenue do they take? Are there any upfront costs? Do your research and shop around.
Easy Stock Loans is not a broker, but we can help pair you with one that understands the stock market and is a good fit for you. If you have any questions surrounding aspects of the stock market, our talented team of experts is glad to discuss over the phone. Call us today!