What is a broker? What to know about the intermediary that helps investors buy stocks

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Here's what you need to know about the investment brokerage industry, and how online brokers have changed the landscape of investing as we know it. Presented by Fidelity.

— to slash commission fees in recent years in the hopes of capturing a greater market share of self-directed investors.Keep in mind that just because you can manage your own portfolio, doesn't necessarily mean you should. There remain instances in which an investor, specifically a high-net worth individual or one with advanced financial needs , may still wish to work directly with a full-service broker.

Deciding whether to work with a discount or full-service broker depends on factors like an individual's investment knowledge and financial status. Most discount brokers who specialize in the stock market are able to charge low commission fees by operating through online platforms with low overhead costs.

"I don't think one [strategy] is necessarily better than another, it's just where you are in your life," says Sun. Though the lower cost is the major lure to working with a discount broker, it should be noted that they don't offer investment advice, tax planning, or personal consultations on their clients' behalf.

 

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