Online brokers have been around since the Internet virtualized all possible enterprises online. They act as middlemen for their clients. But unlike agents that are employed or commissioned by the suppliers themselves to influence the consumers to purchase their product, brokers are somewhat impartial. This means they get a commission when you contract their services to get a particular product or service. It also means that you get to choose which broker will work for you.
There is a range of services offered by each online broker. They are usually affiliated with a licensed online brokerage firm that advertises on their behalf. The most popular forms of services are listed below:
- Trade securities. This is the most basic service that most online brokers offer. They trade securities on behalf of their clients. Securities are exchangeable means of representing financial value. Debt securities (like bonds, banknotes), equity (like company stocks) and derivative contracts can be traded.
- Foreign exchange. This type of service allows banks, institutions and other brokerage firms to buy and sell currencies. Usually, the money you supply will be represented by the brokerage firm of the online broker and traded, similar to the functions of a broker-dealer.
- Investment management. This merges investments of buyer and sellers. They act on the whims of the buyers and sellers that contract their services and earn a commission as compensation. Investment is an active re-routing of an individual’s assets to earn income from the profit secured by the borrower.
- Joint ventures. This type of service allows businesses to pool their resources for particular financial or business ventures. The online brokers bring these like-minded investors together and earn a commission when the investment goes well.
- Risk management advisory. This is a value added service made by most online brokers. They generally seek the advice of senior risk professionals to provide expert advice on how to handle your assets. They would convey this information to you by relating them to your current assets.
- Consulting services. This service is focused on issues regarding regulation requirements that might affect the assets you have invested through the online broker. A manager who makes sure that your investment is legal within the country oversees most of them.
- Global custody. Many investors avail of online brokers that act as custodians of the assets they trade. They report to clients on the status of their investments, settle purchases and sales, and collect information and income from such assets.
People actually hire online brokers because they want to take charge of their investments and spend less on them compared to traditional brokers. The innovation of the service range provided by an online broker is bliss to people who are on the go but want to be updated on the status of their assets. Take note: doing business online might expose you to online hackers that might steal personal information and eventually use it for fraud. It could also expose vulnerable records to future data corruption.