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Brokerage Firm FAQs

What is a brokerage firm? A brokerage firm is a company that has the required legal permissions to indulge in the trading of securities. It also provides analysis and advisory services to clients.

Who are employed in a brokerage firm?

A brokerage firm hires traders and research analysts to work for them. Traders are authorized to sell securities on behalf of the firm and its customers. Research analysts? research stocks track companies and provide advice on whether to buy, hold or sell a particular stock. Most brokerage firms are publicly traded companies that also trade securities for their own profits.

How does a brokerage firm make money?

A brokerage firm sells its knowledge and expertise of the securities markets to its clients. They charge fees for acting as an intermediately between the buyers and sellers of securities. They also make money through proprietary trading.

What are the different types of brokerage firms?

There are three main types of brokerage firms.

Full service brokerage firm offers advice on investment strategies, research and news. Since these firms offer multiple services, their fees are also higher.

Discount brokerage firm is ideal for someone who is an experienced trader who makes his or her own decisions. Discount brokerage firms have lower commission costs than full service brokerage firms.

An introducing brokerage firm is one that specializes in futures markets and buy or sell orders on commodities exchanges through established firms that are clearing members of exchanges.

What are the licenses that a broker from any brokerage firm needs to have?

The licensing and training requirement for futures brokers is different from that needed for licensed stockbrokers. A futures broker needs to have a Series 3 license, while a Series 7 license is essential for a stockbroker. There are many brokers that have dual license so that they can deal in both markets.

What are the factors to keep in mind before hiring a brokerage firm?

One must ensure that the brokerage firm they hire has all the right licenses for trading in stocks and bonds and have the necessary clearance certificates. Those that want to trade directly using the Internet also need to find out whether the systems at the brokerage firms comply with current standards. One needs to be sure of the costs and fees, including any hidden costs of dealing with the particular brokerage firm. One also needs to find out the minimum account size that the firm accepts, the performance bond requirements, the handling of dispute orders and the track record of the firm.

Hotel Brokerage Firms

There are a number of brokerage firms that specialize in different kinds of real estate. There are firms that specialize in home real estate, while others specialize in industrial real estate. Another type of brokerage firm that specialize in a specific type of real estate are hotel brokerage firms. These brokerage firms usually broker hotel asset transactions. These transactions include the sale of hotels, hotel assets and even airports, and these deals usually involve large amounts of money that can reach up to hundreds of millions of dollars.

A brokerage firm’s reputation

Given the substantial amount of money involved in transactions in hotel real estate, investors in this type of property are very wary of the reputation and the capability of the hotel brokerage firm they are using. For these investors, one of the things they consider is the experience of these firms in the industry. Some investors only choose to deal with firms with a proven track record and very good financial standing because they believe that these can give them a certain level of security.

Some investors also look for tangible manifestations of a firm’s performance in the form of awards and recognition that the firm has received during its operation. This is because they believe that being recognized by their peers is one the best indications of the performance and the quality of work that these firms produce. Memberships to broker associations are also considered by some investors because some associations have certain criteria for accepting members. Being a member of some of the most reputable broker associations can also mean that a firm has a good track record.

More importantly, the reputation and the credentials of the people who own these firms are also considered. This is because having competent and reputable people managing these firms can ensure the firm’s viability.

Transactions in hotel real estate involve large sums of money, which makes it important for investors to engage reputable brokerage firms that can handle their investments. To do this, investors would be doing themselves a favor if they check and verify the reputation and the track record of the firms they are considering so that they can be assured of quality and professional work.

How to Make Sure That You Feel Comfortable and Confident in the Brokerage Firm You Invest With

Online brokerage reviews should always be consulted when you are researching which brokerage firm to entrust your money with when making the decision to invest. Not all brokerage firms are created equal. Some firms perform better than others. Different firms offer different fee structures. Different firms offer different sets of tools and resources to help you manage your portfolio and to educate you on how to make smart investment decisions. So by reading reviews and comparing multiple brokerage firms, you will be able to make an informed decision as to which one to go with.

In fact, it could be rightly said that choosing the right brokerage firm is just as important as choosing the right portfolio. If you choose the right firm, you stand better chances of making smarter investment decisions and coming out ahead financially. If you choose the wrong firm, you could end up being bilked out of hidden charges and fees and you may find yourself on your own to choose the right investment moves. You should always make sure that you feel comfortable and confident in the brokerage firm you are dealing with. That’s why researching different online brokerage reviews is an important first step in the process of investing.

So this begs the question: What exactly should you be looking for when you compare online brokerage reviews? What are the criteria that you should be evaluating different online investment brokerage firms against, when choosing one to invest your money with?

Let’s take a look at some key questions you should be asking as you conduct your reviews:

  • How is the quality of the firm’s customer service? Can you get live support by phone during convenient hours? Are the customer support personnel competent and well versed in the technical aspects of investing?
  • Does the firm clearly and plainly specify what are each of its transaction fees, commission rates, and penalties? How are they calculated? This information should be clear and unambiguous.
  • Does the firm offer its customers any type of free information, training, or educational materials through its website on various topics pertaining to investing? Does the firm empower its customers to make smarter investment decision on their own?
  • Does the firm offer a degree of transparency so that customers can easily identify and track their money as it goes through investment process, thus holding the investment firm accountable to the customer?
  • Does the firm offer access to any online account management tools? If so, how sophisticated and how useful are they in terms of helping you manage your investment portfolio? How easy are these tools to use? How easy is it to navigate the firm’s website to find the information that you seek?
  • How have the funds being managed by the firm been performing, over the past several weeks, the past several months, the past year, the past several years, and the past one or more decades? How about since the inception of these funds? While past performance is not a guaranteed indicator of future performance, it gives you an idea of its previous track record.

As you research various online brokerage reviews in your quest to decide which brokerage to invest your money with, it is important that you seek out the answers to the aforementioned list of questions. Beware that a lot of reviews can be highly opinionated and subjective based solely on how well any one particular reviewer’s fund did.

Obviously, it is quite natural for peoples’ opinions about a brokerage firm can be shaped based on how well their investment portfolios performed. The profit motive is, after all, the bottom line, isn’t it? But choosing the right brokerage firm depends on a number of variables, not just how well peoples’ funds performed (although that may be a major influencing factor). So you should make your best effort to sift through the reviews and try to isolate the objective information from among the rest.