Discount Brokers Vs Full Service Brokers - A Detail Comparison

Published on Thursday, September 27, 2018 by Team | Modified on Thursday, June 6, 2019

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Discount Broker Vs Full Service Broker

A stock brokerage company plays an important role in the trading of stocks and other financial instruments traded in exchanges. He provides traders with a platform to access the exchanges and trade in his preferred stocks. A stockbroker works as an intermediary between the exchanges NSE, BSE etc., and the traders.

In the last few years, we saw an emergence of a new type of brokerage companies who call themselves discount brokers. What separates them from traditional brokers? What is the difference between discount and full-service brokers? This article aims to provide details on discount and full-service brokers, the difference between them and who to choose.

What is a Full Service Broker?

A full service brokerage company offers complete trading services including access to trading platform, portfolio management, research and investment advice etc., to its customers. Examples of full-service brokers are Kotak Securities, HDFC Securities, Anand Rathi, Motilal Oswal etc.

What is a Discount Broker?

A discount broker is a brokerage company that provides trading services in stocks, commodities, Future and Options etc., to its customers at a low brokerage fee. He doesn't provide research and investment advice to the customers. Examples of discount brokers include Zerodha, Prostocks, 5Paisa and Fyers etc.

Discount Brokers vs Full Service Brokers- The Difference

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Full-Service Brokers

Discount Brokers

Provides access to trading platforms, research, and advisory.

Only provides access to trading platforms and tools

Brokerage charges is generally a percentage of the trade value with a minimum fee cap.

Brokerage charged is a fixed fee per trade irrespective of the order value

Have branches across the country.

Most provide online services

Suitable for new traders who need assistance in trading.

Suitable for experienced and high volume traders.

Advantages and Disadvantages of Full service Brokers-

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Provides complete services including portfolio management, research and investment tips.

The brokerage fee is high. It is lowered for high volume traders.

Offers multiple types of plans to suit individual trading needs.

Some relationship managers, at times, work on increasing brokerage commission for the company.

Most have branches across the country.

Customers are assigned Relationship Managers to assist in trading.

Advantages and Disadvantages of Discount Broker-

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Charges low brokerage fee which is generally a fixed amount per trade irrespective of trade value.

Most of the discount brokers are completely online with no physical presence.

Most offer instant account opening process with eKYC.

No portfolio management, research and advisory services.

Most discount brokers are tech savvy and hence their platforms and tools are sophisticated and powered with new technology.

Any extra service offered are mostly chargeable.

Which one to choose- a discount broker or a full service broker?

Whether you should choose a discount broker or a full service broker depends on your trading experience. If you are a new trader then you would need assistance in picking up the right stocks, keeping an eye on the market and portfolio management. Here, the relationship manager of a full-service broker can be of immense help to you. For experienced traders, who are good on their own and don't need much support, discount brokers due to low brokerage fees come as a good choice. They also provided sophisticated trading tools which will help experienced traders.

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