What Is a Stockbroker?

Loading the player...

A stockbroker executes buy and sell orders submitted by investors.

Stockbrokers connect the buyers and sellers of stocks, thereby creating liquidity in the market. Stockbrokers trade on behalf of individuals and companies, and for their services, stockbrokers charge a flat fee or a commission, which is a percentage of the sale or purchase price.

The growth of discount brokers on the Internet has made it easier for the general public to invest. But stockbrokers provide service and expertise that discount brokers don't. Stockbrokers go through extensive training to learn about securities, and must also pass rigorous licensing exams, including the Series 7. There are many types of brokers, and other licenses are required to trade specific securities, such as commodities.

Stockbrokers advise their clients whether to buy, sell or hold securities. Good stockbrokers thoroughly research any security on which they make recommendations. And they will take the time to learn about a client’s situation to make suitable recommendations. It’s up to individual investors to determine if the fees and commissions they pay a stockbroker, which eat into their returns, is worth the services provided.