Full Service Broker Vs Discount Broker: Which Is The Best?

 
In today’s post, I’m going to compare Full Service Broker Vs Discount Broker
 
Demat account is compulsory for every regular investor. Because they can’t just go directly to a stock exchange and make a purchase.
 
Brokers are the middle man between investors who want to invest in stocks and share market.
 
It is an important decision for a lot of new investors in their investing journey. That decision is Choosing between a full-service or discount broker.
 
So if you’re looking for a comprehensive comparison of full service broker vs discount broker, you’ve come to the right place.
 
Because I’m going to compare full service broker vs discount broker in terms of:
  1. Brokerage rates
  2. Services offered
  3. Other investment options
  4. Customer service
  5. Network
Before deciding which type of broker to choose, let us first understand what is a stockbroker.
 
So, Let’s do this!
 

What Is A Stockbroker?

A stockbroker is a representative registered with the stock exchanges (NSE and BSE). Stockbroker executes buy and sell orders for stocks on behalf of his clients.
 
Stockbrokers charge commissions for their services. Stockbrokers are associated with a brokerage firm and handle transactions for their retail customers.
 
There are several options for brokerage firms available to you. It can be challenging to pick the best broker according to your needs without proper knowledge.
 
This article is going to dig into the two main types of brokers and what pros and cons come with each.
 
I hope by the end of this article, you find the right broker for you.
 
There are two main types of brokers:
  1. Full-service Broker
  2. Discount Broker

What Is A Full-Service Stockbroker?

A full-service broker is a registered brokerage firm that not only provides the facility of buying and selling stocks but also provides services like investing and tax advice, research reports, retirement planning and much more.
 
With a full-service broker, you also get services like portfolio management services, financial planning, advisory etc.
 
Few examples of full-service brokers in India – ShareKhan, ICICIDirect, Motilal Oswal, HDFC security etc.
 

What Is A Discount Stockbroker?

Discount Broker is an online stockbroker who provides the facility of buying and selling stocks only with low commission.
 
Services like investment advice, research reports are not offered by a discount broker.
 
Few examples of discount stock brokers in India – Zerodha, Upstox, 5paisa, Groww etc.
 

Full Service Broker Vs Discount Broker

Before deciding which type of broker to pick, it is wise to compare Full Service broker vs discount broker in different terms.
 

1. Brokerage

full service broker vs discount broker

Full-service Broker

Full-service broker charge brokerage on a percentage basis.
 
These commissions can be from 0.02 – 0.03 % per transaction for intraday.
While it can be from 0.2 – 0.5 % for delivery of stocks.
 

Discount Broker

Discount broker charge a flat fee on each trade executed.
 
These charges for intraday, 0.03% or Rs. 20/executed order whichever is lower. While for delivery they charge zero brokerage.
 

2. Branches

full service broker vs discount broker

Full-service Broker

Full-Service Broker operates offline from many branches across the country. They also provide online services.
 
Full-service broker has a large number of branches in different cities. Clients can visit branch near to them to solve their queries.
 

Discount Broker

A discount broker is mostly focused on technology. Hence they provide the best online trading platform.
 
Discount brokers have less number of branches.
 

3. Relationship Manager

Relationship Manager

Full-service Broker

A full-service broker offers a dedicated relationship manager and customized support.
 

Discount Broker

Discount broker Do not have a relationship manager for their clients. If you have any query, you have to mail to the broker.
 

4. Add On Services

full service broker vs discount broker

Full-service Broker

A full-service broker offers add-on-services like recommendation tips, research reports and technical calls for traders.
 
Hence, add on services by full services brokers costs more charges compare to that of discount brokers.
 

Discount Broker

A discount broker only provides a trading platform and not any add on services.
 
It makes the operation cost very low.
 

5. Call And Trade Service

full service broker vs discount broker

Full-service Broker

With a full-service broker, you get free call and trade service.
 

Discount Broker

Discount broker may charge you for call and trade service.
 

6. 3-in-1 Account

3-in-1 account means your Trading, Demat and Savings account at one place.

full service broker vs discount broker

Full-service Broker

A full-service broker offers the facility of 3-in-1 account.
 

Discount Broker

There is no facility like a 3-in-1 account with a discount broker.
 

7. Other Investment Option

Other Investment Options

Full-service Broker

With a full-service broker, beside of Equity and Commodities you also have the option to invest in Forex, IPOs, Mutual Funds and Bonds.
 

Discount Broker

A discount broker only offers Equity and Commodities investments.
 

Which One Should You Choose?

To choose the right broker, you should consider some following points.
If you do not have that much money for investment and if you are a beginner then you can go with a discount broker. As discount broker will save a lot of brokerage charges.
 
If you want to do research on your own, then you should choose a discount broker. On other hand, if you simply do not have the time to do so, a full-service broker is good for you.
 
If you ask me which Broker to choose?
It is my recommendation for you to choose a discount broker. Because I think you have to do your own research.
 
Also, you can save a lot of brokerage with a discount broker.

If you want Research Reports and Recommendation Tips, then they are available at marketsmojo.com (desktop site) for free.

Free Research Reports : click here
 
But I want to say that you should not blindly follow these Recommendation Tips. You should do your own analysis and make a decision.

Pros and Cons Of Discount Broker

Pros

  • Lower Cost
  • Online Trading Platform
  • Flat Brokerage Charges
  • Unbiased Services

Cons

  • No Relationship Manager
  • No Advisory
  • Portfolio Management Service
  • 3-in-1 Account

FAQ

Conclusion

When it comes to choosing between a full-service broker and a discount broker, there is no one perfect choice for every investor.
 
It depends on your personal needs and preferences
 
If you have enough knowledge and time to make your own decision without any guidance, then a discount broker is good for you.
 
On the contrary, if you are new in the market and do not mind paying extra commission for the advisory services to save your time, then you can go for Full-service broker.
 
Thats all for this post. I hope you have understood the difference between Full Service Broker Vs Discount Broker.
 
 
Now its time to hear what you have to say.
 
When it comes to the Full Service Broker Vs Discount Broker, which one do you want to prefer?
 
Do you want to go with Full-Service Broker?
 
Or do you prefer to choose Discount Broker?
 
If you have any doubts,
 
Let me know by leaving a comment below.

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