Full Service Brokers vs Discount Brokers

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full service brokers vs discount brokers

In this article, we will discuss the difference between Full service brokers vs Discount Brokers. Which one is best and which one to choose. But before let’s understand some basic features. The transaction in the stock market needs the intervention of the broker. Like every other sector, the introduction of technology has played a major role in the changes and introduced better communication technologies. Before this, people used to access the stock market physically to place a buy or sell order. Today the process has become easier as it requires an internet connection, a bank account, a Demat account, and a smartphone. 

The charges of discount brokers are comparatively less than what a full-service broker charges. But the difference comes in the services full-service brokers provide market analysis and investment advice. The Internet has played a major role in boosting the discount brokerages targeting the new traders, mostly young and tech-savvy.

What is a discount broker?

A discount broker provides the trading services at reduced commission rates to its customers. They aim for an online platform for enabling buy and sell transactions. A discount broker does not provide other allied services such as investment advisory, market analysis etc. In short, a discount broker enables the order execution and does not provide the analysis or advisory related to the trading.

What is a Full Service Broker?

A full-service broker is a licensed financial broker/firm that provides various services to its clients. The services include research and advice, retirement planning, tax tips, and much more. Comparatively to the discount broker, a full-service broker’s commission is higher due to their services. 

They provide the expertise for people who don’t have the time to stay up-to-date on complicated tax or estate planning issues. People looking to trade without the add-on services can go for the discount brokers.

Difference between a full service brokers vs discount brokers

Here are the key differences between a full service brokers vs Discount brokers 

S.No Full Service Broker Discount Broker
 1.Full-service brokers not only execute the trades to their clients but also provide a whole host of services like research on trending topics, sectoral and stock research, tax planning, etc.Discount Brokers mostly charge lower fees and provide service to traders who have comparatively smaller capital to trade with.
 2.They have multiple physical branches at different locations providing online and offline services, unlike discount brokerages. This is the reason why the transaction cost is higher than that charged by discount brokers.Discount brokers are generally self-directed and are for active traders. This is the major reason why discount brokers gained popularity as investors monitor movements regularly.
 3.Full-service brokers have been around for a longer time due to which the traditional traders have found the trading experience better with them.Young traders are more attracted to discount brokers due to their pricing and fast services.

Advantages of a Discount broker 

●    Low Cost: Discount brokers offer the lowest brokerage services to their clients as compared to full-service brokers. This helps the traders or investors to trade in profit with the low BEP ( Break-even Point )

● Online Trading Terminal: Discount brokers carry out transactions through the online trading terminal. The trading terminals are usually free of cost.

● Unbiased Offer: discount broker remains unbiased to everyone even if the person is a small investor or a big player; the offers remain the same.

● Low Transitional Cost: Most discount brokers offer their clients the lowest transactional cost due to their high volume of trades. 

● Clients Education: discount brokers usually provide their client’s educational videos tutorials to understand the stock market easily. On the other hand, full-service brokers don’t provide such facilities.

● Paperless Account Opening: there is a paperless transaction; you need the adhaar card, and the account opens in 10 mins. The full-service broker’s process is in the same way. 

● No Minimum Brokerage: there is no minimum brokerage charged from the clients. If you are looking to trade in penny stock, the discount broker is the best option.

● Flat Brokerage Charges: Some Discount brokers charge flat brokerage charges from their clients irrespective of Trade volume. 

Disadvantages of Discount Stock Broker:

● Additional charges for Relationship Manager: Discount brokers offer the Relationship manager to its client only if they demand it. There are additional charges to it. 

● All-in-one Roof: full-service broker offers all the services under one roof, and on the other hand, the discount broker offers stock investment and the mutual fund investment option to their client

● No advisory: the discount brokers provide no advisory services. Whereas some full-service broker provides the service for free. 

● PMS Service: They do not offer PMS service to their clients. If you are looking for a portfolio manager, a full-service broker has the upper hand. 

● 3-in-1 account: The service banking broker provides 3 in 1 account; a discount broker doesn’t provide the 3 in 1 account to its clients. 

Advantages of the full service brokers

● The full-service broker provides expertise to their customers. If you have an expert supporting your decision, you have stronger decision-making in your hands without apprehension.

● Individual attention makes sure that your portfolio is in safe hands. 

● They provide the clients with complete market research analysis and monitoring that helps them to keep them ahead of the game. 

● Full-service brokers offer other services, too, such as tax savings tips, retirement planning, life insurance benefits, etc.

Disadvantages of choosing a Full-Service Broker

● Usually, the discount broker charges a reasonable amount for the services they provide. The broker does offer customized and individual services, but the price point is a major issue. This makes the services aim at a particular group of people. Also, the brokerage is higher as compared to the discount brokers. 

● Though the service broker guides you to the stock market, always remember to cross-check and not trust them blindly. They indeed are your financial partner, but sales are the major business, and ultimately, they have to earn commission or brokerage. Always try to cross-question before commencing any trading. 

Full service brokers vs discount brokers and which to choose?

Investors who have good capital can easily afford to pay for professional investment advice and are usually cautious about choosing the right investing source. Therefore they usually choose a full-service broker. These investors do not look over the market frequently and usually are the long-term players. An HNI (high network with individuals) is highly unlikely to go into the markets without a plan and sound knowledge as it takes a complete lot at stake, simply because a lot is at stake.

On the other hand, if an investor with a small portfolio is looking to invest, paying for financial advice is quite illogical as it will always take away some amount from their returns. These frequent traders require brokers to place buy and sell orders. In short, they are looking for the benefit from the lower commissions discount brokers charge.

This also depends on the individual’s knowledge and experience level as a trader. People who have experience can easily choose a discount broker as they better understand the market.


In conclusion, this article covers the Comparison of full service brokers vs discount brokers, mainly depending on the size of the capital a trader is ready to invest. Moreover, it also depends on the trader’s experience, knowledge, and overall financial maturity. If you want to know about the best discount broker, you can read “Best Discount Brokers in India“. 

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