| A Stock Broker is a licensed individual who acts as an | | | | to engage a broker to execute their trade. Under this |
| agent to buy and sell shares and stock investments | | | | banner also comes Online Stock brokers, who charge |
| on behalf of their client. The Australian Securities | | | | minimal brokerage fees and therefore tend to service |
| Exchange (ASX) dictates that transactions may only | | | | "mum & dad" investors with smaller portfolios. |
| be made by a recognised stock broker; therefore, | | | | As well as buying and selling stocks and shares, the |
| they serve as a liaison party between the ASX and | | | | advisor may also offer other advisory services on |
| the client/investor. To serve as an stock advisor, you | | | | other traditional investments such as debentures, |
| must be qualified and certified by the Australian | | | | government bonds and listed property trusts, and/or |
| Securities and Investments Commission, commonly | | | | non-listed investment options such as cash |
| referred to as ASIC. | | | | management, property and equity trusts. Full service |
| There are three main types of stock brokers in | | | | brokerage firms may go so far as to offer a |
| Australia, categorised according to the level of | | | | complete financial portfolio tailored to your specific |
| service they provide. | | | | financial needs, including retirement planning. This has |
| The first is the most comprehensive of the three, | | | | become fashionable lately, with the larger retail firms |
| and although given different titles at different firms, | | | | providing Superannuation Planning for their clients. |
| they are typically refereed to as a Discretionary | | | | Choosing which advisor to use is a decision that |
| Trading Stock Broker. These brokers are given full | | | | shouldn't be made lightly. Unlike in the US, competition |
| authority to make all trading decisions on behalf of | | | | between stock brokers is not as strong, and |
| their client and, as the name implies, conduct trades | | | | therefore their services and fees are not as enticing. |
| at their discretion. To be allowed to trade on a | | | | If you are less experienced and want to give the |
| discretionary basis for clients, most the compliance | | | | control of your investments to the advisor, keep in |
| department of most firms will have internal | | | | mind that the more responsibility the broker bears, |
| requirements such as a minimum level of industry | | | | the more they will cost. However, given that playing |
| experience or the time they have worked as a | | | | the market is essentially a gamble, it can be far more |
| advisor. A 5 year minimum is typical. | | | | expensive to go it alone in an effort to cut costs if |
| The next level of service is referred to as Full | | | | you don't know what you are doing. |
| Service Stockbroking. This allows the client/investor a | | | | Gamblers are often told, 'don't bet what you can't |
| small measure of involvement but with as little risk as | | | | afford to lose'. The same advice applies to playing |
| possible. Although a discretionary advisor is technically | | | | the market. If you love the anticipation and |
| also a full service broker, there is usually a distinction | | | | excitement, and money is no object, then play to |
| made between the two, as a full service advisor will | | | | your heart's content and engage the services of a |
| offer the client advice on which stocks to buy and | | | | non-advisory firm. But if risk taking is not something |
| sell, but the final decision is made by the client. | | | | you enjoy, and you would rather leave it up to the |
| The third is an Execution Only Stock Broker. Typically | | | | experts, then you may want to consider handing |
| these brokers are used by experienced investors | | | | over the reins to a full service stock broker. |
| who require minimal advice and input, and simply need | | | | Obviously due diligence is a must. |