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Duties of a Stock Broker

A stock broker is a middleman between the investor and the securities exchange. He has the right to buy and sell securities on behalf of the investor. Stocks are traded through exchanges, but an investor cannot buy or sell stocks directly. You need an intermediary who can help in swiftly carrying out the process. This middleman can be an individual or a company that has the authority to buy and sell stocks on your behalf. Such an individual or company is known as a stock broker.

What does a stock broker do?

A stock broker acts as the eyes and ears of his clients. He manages their money in a way that optimizes their financial gain. As their typical earning is through commission, stock brokers select investments that tend to produce substantial growth for their success.

Stock brokers are generally associated with a firm or are individual entities. A stock broker charges a commission or fee for his services. Apart from performing the buying and selling, stock brokers also help investors make productive investment decisions by providing their expert advice.

Stock brokers usually spend time analyzing tax laws and news that might affect their clients’ portfolio. This research continues as the market opens for the day. Simultaneously, he contacts clients for trading or investment activities.

Since stock brokers have to also focus on building their portfolio, they are on a continuous hunt for new clients while handling the needs of their existing ones. Hence a stock broker attends seminars, networking events, or performs various self-marketing techniques like cold calling.

What are the duties of a stock broker?

A stock broker carries a tremendous amount of responsibility. Apart from managing their clients’ portfolio, he has to stay updated with the latest financial news, tax laws and market research. These financial agents work in a fast-paced and stressful environment. If you are looking for the best stock broker, the following are the qualities to look for.

A savvy salesperson

A stock broker should create his clientele even if he is working for a large trading firm. Customer recruitment and trading is a large portion of the service provided by a stock broker. A broker might spend his day calling prospective clients, creating relationships with other industry professionals and following up with his current clients. As customers rely heavily on their stock broker for investment, the broker should build a level of trust and security by contacting them regularly and updating them about their portfolio and new investment opportunities.

Be transparent with information

Brokers are required to disclose all the information related to investment including the risks. Brokers should be honest with their clients and should not provide misleading, false and exaggerating statements.

Execute trades with ease

A stock broker initiates trade on behalf of his client. This is generally done over the internet, however, few stock brokers also do it by phone or in person. The selection of stocks depends on what the stock broker feels necessary for the client’s portfolio. Stock broker skills include understanding the needs and interests of the client and market fluctuations for gaining profit. This can be a volatile task due to the sensitivity of the market.

Meet customer needs

It is important that a stock broker fully understands his customer’s financial situation, investment needs and risk tolerance. When a stock broker is researching and selecting an investment, he must do so based on his client’s needs that will suit the portfolio. For example, a broker should not suggest high-risk investments for a low-risk portfolio.

Be fiducial

As the major earning of stock brokers comes through commission, there are chances of conflict between the stock broker’s interests. However, as a fiduciary duty, a stock broker should put the needs of his clients above his own. A stock broker should also abide by the rules laid down by the regulatory authorities. These agencies require all stock brokers to be honest, trade fair and only make investments that will benefit the client. 

Conclusion

A stock broker can be an ideal investment partner given that he is well aware of his duties towards the clients. Hunt for multiple stock brokers before finalizing on one.

 

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