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Role of Brokers in Investment
The role of stockbrokers has significantly evolved over the past few years. Today brokers are not just there for selling and buying stocks on behalf of their customers. They play a more significant role in assisting investors to wade through the whole process of investment by providing research-based advice on the stocks. This helps the clients to invest in alternative assets and subscribe to IPOs and mutual funds schemes. Here are some of the vital roles of stockbrokers in client’s investment journey.
Research and Advice
Most brokerage houses have set up in-house research teams which scan companies and stocks and also analyze the macro-economic scenario which impacts stock markets. With the input from the research team, the brokerage firms put sell or buy recommendation on stocks.
Brokers also have technical analysts who provide market trends and intra-day trading tips. They send out news and alerts continuously. They also conduct investor education programs which help in improving your knowledge about investing in the markets.
Selling and Buying Stocks
This is the main function of brokers. They act as an intermediary for clients to transact on a stock exchange. They sell and buy stocks for people who have signed up with them as clients. With the onset of online facilities, investors can execute trades directly on trading platforms offered by brokerage houses. Your broker then forwards the information related to your trade and makes transfer arrangement for stocks purchased.
Most brokers assign a relationship manager to interact with clients who act as an advisor. Relationship managers advise clients on when to make transactions and guide them about what to look for in market dealings. They can advise you on putting stop-loss, especially when making intra-day trades. They monitor your portfolio and provide timely advice on them.
Stockbrokers are also well capitalized nowadays. It implies that they have a strong balance sheet with high equity and debt on books. Stock exchanges monitor the extent to which brokers lend in line with their net worth. Most large brokerage houses thus provide financing facilities to clients looking to take leverage positions. This means borrowing for trading. The NBFC arm of brokerage house is usually concerned with funding. They allow clients to take positions in the market after paying the margin amount.
Investment in Other Asset Class
Besides investing in stocks, brokers help you to invest in other asset classes such as gold ETFs, commodities and mutual fund products. They also assist you in investment in IPO of companies.
Brokers are nowadays a one-stop investment solution providers, assisting clients to achieve their financial goals successfully. In case you are new to stock trading, many stock brokers offer these services. Just get in touch with them and start trading.