What is a discount broker?

Since discount brokers focus on executing client trades and generally operate online with no physical offices, these brokers can have lower commissions than full-service brokers and may provide more robust trading platforms to help investors analyze investments themselves. Sign up for stock news with our Invested newsletter. ]

Can discount brokers afford to charge lower fees?

Discount brokers can afford to charge lower fees because, unlike full-service brokers, they usually don't provide extra services such as research, personal investment advice, tax planning or robo-advisory. The difference between full-service brokers and discount brokers has blurred somewhat in recent years.

What is the difference between a full-service broker and a discount broker?

However, a discount broker does not provide investment advice or perform analysis on a client's behalf, unlike a full-service broker. 1 Before the emergence of better communications technology, only individuals with a far above average annual income could afford a broker and access to the stock market.

What do investors look for when comparing online brokers?

Pricing is one of the first things investors look at when comparing brokers. Since most online brokers now offer ‘commission-free’ trading, it can be difficult to tell which brokers are actually the least expensive. We look at brokerage fees like memberships and subscriptions, commissions, hidden fees, and bonus offers.