In simplistic terms:
Definition of 'Stockbroker'
1. An agent that charges a fee or commission for executing buy and sell orders submitted by an investor.
2. The firm that acts as an agent for a customer, charging the customer a commission for its services.
What does a broker do?
To better understand what a broker is and how one operates, let's define the broker's role.
A stockbroker is a salesperson.
A broker works for a stock brokerage house (like Merrill Lynch or Charles Schwab).
The broker's job is to carry out your transactions. (If you like Chinese food, the broker may also carry that out, but that's between the two of you.)
Common questions about stockbrokers
Q. How does a stockbroker get paid?
A. Brokers are paid by salary, commissions on sales, or a mix of both.
Q. What qualifies someone to become a stockbroker?
A. The glamorous life of stockbroker is not for everyone. Stockbrokers must pass two licensing examinations, called the Series 7 and Series 63. Successfully completing these exams allows the broker to advise you, to solicit business from you, and to execute transactions on your behalf.
In short, brokerage houses employ brokers to execute your transactions, and in the case of full-service brokers, to advise you in making your investment decisions.
Although brokers may do their own research, they're not research analysts -- not one of the people about whom you might read, "Sylvester J. Quibble of Hackensack Associates raised his estimate for Goosefeathers' latest full-year earnings from $0.19 to $0.35 per share, citing resurgence in demand for eiderdown quilts among bilingual tots." Research analysts are other folks who work for brokerages, and they're the ones doing that sort of enlightening, in-depth research of a company's business and industry.
These brokers tend to offer a wider variety of financial products, investment advice, and research than discount brokers. They may offer stocks, bonds, derivatives, annuities, and insurance. In exchange, they charge considerably higher fees.
Full-service brokers solicit business and are paid mostly by commissions. This means they get compensated not according to how well your portfolio does, but by how often you trade. In turn, that means it's in your broker's interest to have you trade as often as possible -- one of the main reasons why we at The Motley Fool eschew full-service brokerages.
With Brokers you need to contact the company and ask if they have a minimum investment amount.