Discount brokers are the intermediaries through whom you can buy and sell stocks, bonds, options, parts of mutual funds or other securities (and basically anything else that is traded on the stock market and/or has to do with investing).
We distinguish discount and online brokers from full-service brokers based on the services they offer to investors. Discount and online brokers let their clients select and deal with their investments independently, either online or over the phone. Full service brokers advise their clients on which investments to choose through Investment Advisors. While discount brokers charge relatively low fees for transactions (usually under $10 per trade), full service brokers have way higher fees in order to pay for their advisors, offices, fancy stationery etc.
In Canada, all brokers (discount or not) must be registered members of the Investment Industry Regulatory Organization of Canada (IIROC), a self-regulating organization whose mission is to protect investors. You can find a list of all registered brokers in Canada on their site. It doesn’t have the sexiest name, but it’s indispensible for investors. If a broker ever goes bankrupt (and they’re registered with IIROC, as they are legally bound to be), their clients are eligible for coverage up to 1 million dollars by the Canadian Investor Protection Fund (CIPF).
Synonyms: brokerage, online broker, broker
A full service broker is a brokerage firm that, unlike discount brokers, offers financial and investment advice. Like discount brokers, they allow their clients to buy and sell stocks, bonds and other financial products. Read more