It includes terms like crypto, deposits, NFT, currency, stocks, shares, advisors, brokers, etc. This article shall be throwing light on two of the main topics that are covered under the finance department, which are Broker and Advisor.
Key Takeaways
- Brokers facilitate buying and selling of financial instruments, while advisors provide guidance and recommendations for financial planning.
- Advisors have a fiduciary duty to act in their client’s best interests, while brokers are held to a suitability standard.
- Brokers earn commissions on transactions, whereas advisors charge fees based on assets under management or an hourly rate.
Broker vs Advisor
The difference between a broker and an advisor is that the former is someone who holds, buys, and sells assets on behalf of their clients, while on the other hand, the latter is a person who advises his/ her clients in making financial decisions and choosing apt stocks or shares.
At one point, a broker can either represent a buyer or a seller. It never represents both parties at the same time, as it’s not convenient for the broker to do so.
Advisors are appointed by clients who enjoy an official position. They only provide advice and never buy or sell on behalf of their clients.
Comparison Table
| Parameters of Comparison | Broker | Advisor |
|---|---|---|
| Significance | A broker sells and buys stuff on behalf of his/ her clients. | An advisor provides paid pieces of advice to his/ her clients. |
| Payment Method | Brokers are paid a commission on the sale of some type of investment. | Advisors are paid to provide bits of advice to clients in various fields. |
| Total Number | There are around three hundred brokerage firms in the world. | There are around two lakh advisors currently around the globe. |
| Legal Obligations | Brokers are not subjected to high-order legal matters. | Advisors need to maintain a high legal standard. |
| Companies | Upstox, Zerodha, angel broking, groww, 5paisa, share khan, etc. | Dana investment advisor, check capital management, new south capital management, etc. |
What is A Broker?
A broker directs to a professional who acts as a buyer and seller middleman. The broker sells and buys assets on behalf of their clients.
Zerodha is one of the most important and well-established brokerage firms in India so far. Here is a list of a few famous brokerage firms:
- 5paisa
- Angel Broking
- Zerodha
- Robin hood
- Charles Schwab
- Fidelity investments
- Groww
- Upstox
- Share khan
This is very unlike in the case of advisors. Brokers get to enjoy their individuality and freedom.
He/ she acts or participates as an intermediator between a buyer and a seller and helps bring the two together. The main responsibilities of a broker are:
- Executes sales.
- They need to ensure that the customer is satisfied.
What is An Advisor?
Advisors are people who have immense knowledge of a particular field. They help share their knowledge with their clients and guide them in any field that the client desires to be guided on.
There are more than two lakh advisors across the globe. Here is a list of a few advising agencies:
- Salem Investment Counselor
- Dana’s Investment Advisor
- Check Capital Management
- New South Capital Management
- California Financial Advisor
- The Burney Company
- Anchor Capital Advisor
- Clifford Swan Investment Advisor
- Lee Financial
If they don’t abide by these laws, they can be strictly disregarded and hence punished. An advisor is a mentor or a guide who mentors/ guides his/ her clients to achieve success in their respective fields. Their roles are:
- Keeping their clients informed about all the new updates.
- Demonstrates a caring and quite considerate attitude towards their advisees.
Main Differences Between A Broker and An Advisor
- Brokers are paid for any sale of an investment, but advisors are paid for only providing consultation/ bits of advice to their clients.
- Upstox, Zerodha, groww, angle broking, and 5paisa are some of the Indian brokerage firms, while on the other hand new south capital management, Dana investment advisor, and check capital management are a few of the important advising firms.
Last Updated : 13 July, 2023
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
The list of brokerage firms and advising agencies was very informative. It’s great to see such a comprehensive comparison.
Interesting to see the difference in the number of brokerage firms compared to advising agencies. This gives a good perspective on the scale of each type of service.
The roles of brokers and advisors were explained brilliantly. I love the detailed exploration of their individual responsibilities.
It’s very clear that the legal obligations for advisors are much higher than for brokers. I appreciate the breakdown of this information.
The comparison between brokers and advisors was really well-explained. It’s easy to understand the different roles and responsibilities of each.
I’m not sure if the information about brokers not being subjected to high-order legal matters is entirely accurate. Perhaps the legal aspect needs a bit more clarity.