Discount Broker vs. Full Service Broker

There are two types of stock brokers in the market.

1. Discount Broker
2. Full time broker

Let’s discuss about types of brokers in India and how you can choose between discount broking and full-service broking, this comparison the two help you in when to choose a discount broker and when to opt for a full-service broker.

Discount Brokers

Stock trading has gone online. This has led to the emergence of a new strain of brokers called discount brokers in India. The discount brokerage companies are getting popular among the traders owing to their low, fixed brokerage plans wherein they charge a fixed brokerage charge irrespective of the trade value. For illustration, Bengaluru based discount broking company Zerodha charges a brokerage charge of Rs 20 per order on equity intraday. So whether your trade value is Rs or Rs 10 lakhs, the brokerage charged will be the same.

Retail traders wonder how discount broking companies charge low brokerage freights. It’s because they work on a different business model than full- service broking companies. They offer limited services at a cheaper price in comparison to full service brokers. They offer their services online and have a limited physical presence which helps them save capital on employees and infrastructure.

Full Service Broker

Full service brokers are also known as traditional brokers and offer a pack of services. Along with providing a stock trading platform they also offer research and advisory, investment banking, transactions and asset operation under one umbrella and any other service at the option of the individual depending upon the demand and offering of the stock broker.

Traditional brokers are available from long period of time in the market and now they have both online and offline presence. Some traditional stock brokers also offer banking services along with Demat Account service and a trading platform.

Full Service brokers as the name suggests offer varied services due to which their commission is generally high. They generally charge on percentage base, which is based on each trade executed. For illustration, if you’re investing Rs. 1,00,000  and assuming the brokerage charged is 0.3%, also for every sale of Rs. 1,00,000  they will charge Rs. 300 as brokerage.

Pros & Cons of Discount Brokers

Pros & cons of Full service brokers

Difference between Discount broker and Full service broker

Conclusion

We have looked at full brokerage vs discount brokerage. As can be seen above, both services have values of their own. While a discount brokerage company will give you with all the trading tools you demand in exchange for a minimum cost, full service brokerage firms will offer you investing guidance in exchange for a high charge. The true difference between discount broker and full service broker as per your need. However, also you might choose for a discount brokerage account, if you have the specialized powers to trade by yourself. However, a full service brokerage account might be a better option, if you wish to invest but don’t have the time to do so.