Who should you choose? Discount or full service broker
Every investor who is active in the equity market needs to have a demat account and a trading account. With many attractive trading rates advertised by new brokerage firms and the current market volatility, traders as well as investors are looking to cut costs and maximise returns.
Generally, it is observed that high volume, short-term investors or traders prefer discount brokers, while long-term investors stick with full service brokerage. Here is a quick comparative view of discount brokerage and full-service brokerage, which will help you make a better choice.
Cost:
Full-service brokerages charge a higher fee than discount brokerage. On average full-service brokerages charge between 0.3 to 0.5 per cent per trade. While as their name suggests discount brokers charge a lower fee between Rs. 10 to Rs. 20 per trade, irrespective of the value of the traded account. Also, most discount brokers do not charge for delivery-based buying.
Ease of Use:
Full-service brokerages offer all kinds of service such as dial-in trade placement wherein you can call customer care executives who will place orders on your behalf. Their service includes recommendations based on stock research. They also provide leverage funding based on your portfolio holding.
On the other hand, the new age discount brokers provide online platforms, through which users can place trade from anywhere using internet. Discount brokerages are favoured by seasoned brokers who need little assistance and do their own research. Also young investor prefer trading through online platform with least human interaction.
Safety:
Many a times, full-service brokerage is offered by banks themselves, thereby linking users bank account, demat and trading account. This provides a sense of safety to many investors who trust banks more than brokers. These brokerages services are offered by top banks including ICICI Bank, HDFC Bank, Kotak Bank and SBI.
Another advantages that full-service brokerages have is a good network of branches in all major cities and towns, thereby providing good offline customer services. It is something very difficult to get in touch with an executive or have a face to face interaction with a discount brokerage firm in case of any complaint or grievances, leaving users frustrated.
Nowadays, selecting a brokerage firm depends more about your personal preference. So, answering a few questions will help you decide which kind of brokerage you should opt for; Do you do your own research? Are you tech-savvy? Do you trade in high volumes? Do you trust humans more than technology?