What are Full-Service Brokers?

Brokers can be categorized into 2 types:

• Full-Service Brokers
• Discount Brokers

Full-Service brokers are traditional brokers that provide a wide range of services to their customers. 

These services include:

• investment advisory,
• portfolio and wealth management, and
• research services

Earlier these services were provided offline but with increasing digitization in India, the services have moved online as well and some of the brokers have launched the services PAN India and have offices across India. 

A client can walk in with any kind of request from investment in Equity, Mutual funds, NPS, Forex to Commodities. Since they offer the banquet of services, the charges are also normally higher. Some prominent full-service brokers operating in India are ICICI Direct, SBI Securities, Angel Broking, HDFC Securities, Motilal Oswal Securities, Sharekhan, and Kotak Securities.

Full-service brokers employ a dedicated research team tasked with a continuous fundamental and technical analysis of the Stock market and publish their findings through various reports on stocks, companies, and the overall markets. They also provide their customers with dedicated Relationship Managers (RM) to cater to their needs and queries. Full-service brokerage firms, thus, employ a lot of people.

Pros and cons of Full-Time Brokers

Pros: 

• They offer a wide range of Services and have a wide presence through their PAN India offices(offline presence)
• Offer Investment advisory and research
• Dedicated Relationship Manager for the account

Cons

• Higher commission /brokerage
• High transaction costs
• The difference in brokerage plans between traders with high volume and traders with low volume

Discount Brokers

As broking is increasingly shifting to online mode, a new type of broker has started developing called Discount Brokers. How are these brokers different from the Full-service brokers? Well here are few things that set them apart from the Full-service brokers.

• The first thing is that they have a low and fixed brokerage
• The commission is low and fixed irrespective of the value of the trade.
• The operation is mainly online and hence there is nil or little physical contact which helps them keep the costs low
• They do not offer any value-added services.

So we can consider discount brokers as brokers who offer essential services like buy /sell orders at highly competitive rates.

Here is a list of some of the discount brokers that are hot favourites in 2020 (Source – beststockbrokerindia.com)

• Wisdom Capital
• Zerodha
• Upstox
• SAMCO
• SAS online
• 5 Paisa
• Trade smart online
• Tradejini
• Pro stock
• RK Global

Pros & Cons of Discount Brokers

Here are the pros and cons of the discount brokers

Pros of the discount broker are the following:

• Low transaction costs
• Online trading platform
• Quick account opening
• Online tutorials on how to trade and use their system
• Same privilege to both high-value traders and traders with low trading volumes

The cons or disadvantages of the discount brokers are the following:-

• No advisory support for investing and trading and so the investor has to decide which stock to invest in and when to get out of it
• Not many branches and offices as most of the business is online
• They do not offer the 3-in-1 account (as they do not open the bank account)
• There is no relationship manager specifically assigned to you
• They do not provide Portfolio Management Service

Side by Side Comparison

You have to understand your needs before deciding on a Full-service or a Discount broker. It is, however, advisable to opt for a Full-service broker if you do not have the time or the expertise to make your own investment decisions.