Most of the times, we customers,fail to believe and understand why some businesses charge less whereas if we take the similar products or services from their competitors, the other business entities charge more. This is the same in case of brokers. There are full-service brokers who are known for their brokerage rates that are really high and on the other side, there are discount brokers that are also known for their brokerage rates but the rates that are really discounted or cheap as their name suggests. For a layman, such a wide difference in the brokerage rates is nothing less than confusion. But if you plan to trade and start looking for the brokers’ details, then you would certainly come to know the reason. The reason is simple and clear. Both types of brokers exist because they offer trading assistance and both types of brokers are also doing well in their respective fields. However, there is a slight difference in their list of offerings. On one hand, there are full-service brokers who provide a suite of financial services, including trading and investment assistance. And then we have discount brokers who offer limited but valuable trading services and this is one of the reasons behind their low charges. Since they offer a little less, their charges are also less. And one more thing that is worth noticing is the mode of operations.
Discount brokers operate online which means their operational cost is nothing in front of full-service brokers who sit in plush offices and have the best infrastructure to keep their customers entertained. And by now, you would know that this cost of infrastructure is included indirectlyin their high brokerage rates charged from you. You might not want to take their premium services at such high cost but there are many who love to have personalized attention from their brokers because they want added financial services as well. But for customers like you, discount brokers are apt because they offer exactly what a reasonable trader or an investor wants, without any glam and at the most affordable rates.