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The Many Roles Of Stock Market Brokers

September 10, 2011

Stock market brokers are in the public eye more and more these days. The drama of Wall Street increases and does not seem to fade. The financial world has come to affect every part of our daily lives. Yet, many people remain ignorant about what stock market brokers do and how they operate in the financial exchanges of the world.

A broker is simply someone who manages a deal between a buyer and a seller. Brokers get a commission when the deal is completed. A stock broker is a professional broker who specializes in handling stock shares and securities. They act as middle men between people or entities that want to buy stocks and the people or entities who presently hold those stocks. They make money from fees for managing the processes which occur during these deals.

Stock market brokers are essentially independent agents. They seek to bring people together in order to facilitate the selling of stocks and other financial instruments. They are also wonderful sources of information about stock prices, market conditions, corporate fundamentals and other financial topics. In the Internet age, there is often a surplus of information that anyone can access. A stock market broker, due to his or her knowledge and experience, can help buyers and sellers edit and interpret that wealth of information so that they can use it in their decision-making processes.

In the United States, stock market brokers must pass a certain exam in order to receive official certification. This exam is known as the General Securities Representative Exam. Some locations and careers for stock brokers may require them to seek additional certifications.

At an official stock exchange, of which there are several around the world, the roles of stock market brokers are critical. Only members of an exchange can buy and sell shares inside the exchange and their purchases must be made through a broker. These purchases can be executed in one of three ways. In an execution-only role, the broker simply carries out the will of the client, buying or selling upon command without comment or advice. A broker may also act as an adviser in a similar situation, seeking to help his or her client make the best decision. Some clients choose to simply let their stock market brokers take care of everything and make minimal input on exchanges.

Alternately, these brokers may act as investment advisers for their clients. In these cases, the client retains the broker for an extended period of time, rather than just for the duration of one purchase. The stock broker advises clients about changing market conditions and counsels them to buy, sell or hold.

Stock market brokers may have an even more general role in the financial life of their clients when they act as financial advisers. Brokers in this role advise clients regarding the whole of their finances and not just their investments. This role for stock market brokers occurs especially when clients begin to seek retirement planning advice as they grow older.