Difference Between Full-Service Broker and Discount Broker

Edited by Diffzy | Updated on: May 14, 2023


Difference Between Full-Service Broker and Discount Broker

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Everyone, as we are all aware, requires a Demat account in order to invest in the stock market. And a depository participant, also known as a broker—for whom there are several companies—opens a Demat account. These brokerage firms can be divided into three categories: discount brokers, full-service brokers, and banks.

A variety of investment products are offered by all of the brokers. Additionally, they offer margin trading. In addition, they offer trading apps to make buying and selling trades easier. The majority of brokers offer these services. The investor can use his Demat account for purchasing, holding, and selling securities along with his savings account and trading account.

Full-service broker vs. Discount broker

Investors with sizable funds are often more prudent and experienced, and they can afford to pay for professional financial guidance. They choose full-service brokers as a result. Such investors are long-term participants who do not frequently trade. Because there is so much at stake, it is highly improbable that a high-net-worth individual (HNI) will invest without a strategy and adequate information.

Contrarily, investors with a modest portfolio do not think it makes sense to pay for financial guidance because doing so could reduce their results. Since they trade more often, brokers must put buy and sell orders for them. They can therefore gain from the cheaper commissions charged by discount brokers.

Difference between full-service broker and discount broker in tabular form

Parameters of comparisonFull service brokerDiscount broker
MeaningA full-service broker is a brokerage firm that offers a wide range of services to its customers.  A discount broker is a type of broker company that enables online stock and investment trading
Brokerage in deliveryOn delivery also High brokerage is charged by Full service brokerBrokerage charge is comparatively low in the case of discount broker in delivery
BrokerageHigh given the percentage-based commission they levy on each trade doneThey provide a set rate for each deal made.
Service offeredprovide access to a trading platform and investment advice.  There is only a trading platform offered.
Suitable forBeginners and busy individualsThose who have the time and expertise to conduct independent research or who have a financial advisor.
BranchesThere are numerous branches located all around the nation. Have no branches

What is a full-service broker?

A professional stockbroker known as a full-service broker provides their clients with recommendations regarding the securities that investors should buy or sell. They initially consider the investors' initial investing objectives as well as their level of risk tolerance for this purpose.

Additionally, the broker uses both the investor's information and his or her understanding of the market to choose stocks that will assist you in achieving your objective. Additionally, they offer advice on when to make stock trades. They execute the transaction on your behalf as well. They have a lot of locations all around the nation. Customers can contact those branches and speak with the executive about their concerns.

You will be required to pay a commission as brokerage for each of these services. Due to the wide range of services they provide, full-service brokers charge hefty brokerage fees. They offer technical calls as well as fundamental analyses for traders and investors.

Services offered by a full-service broker

Relationship Manager: By assigning an investor a relationship manager or advisor who will endeavor to make the portfolio lucrative, it offers individualized services. It falls under portfolio management services, thus the expert will update the portfolio.

On-call service - When investors have a question, they have the option of contacting the relationship manager on call, who will respond to their question.

Call and trade facility: They also offer call and trade capabilities that are free of charge. To acquire or sell the shares, you can phone the broker. And the broker carries out the order at the investor's request.

Recommendation facility: Full-Service Broker offers advice tips via calls, emails, Whatsapp, SMS, and other communication channels.

Research Reports: They also give their clientele research reports.

Updates: Full-Service Brokers also keep you informed of the status and balance of your account.

Advice: Giving clients advice Along with providing trading platforms and trading accounts for trading, full-service brokers also give investors advice on how to invest.

What should I invest?

In what to invest?

When should I make an investment?

What are the advantages of full service broker?


The most important advantage of full-service broker is that it has both online and offline services available which always makes the process easy and facilitate the transaction.

It also provides investment services, such as research advisory which plays an important role as it helps in gathering information.

Branch offices spread out in different cities unwavering RM support

Disadvantages of full service broker

The most noticeable disadvantage is that It costs more to use a broker which makes it costly and unpopular in the market.

Different traders have different brokerage plans, with large volume traders typically having cheaper brokerage.

More money is spent on transactions, this also leads to making the transaction cost expensive..

What is a discount broker?

A professional stockbroker who buys and sells securities on behalf of the investor for a reduced commission is known as a discount broker. They are renowned for providing affordable brokerage. They simply provide basic services, such as carrying out order buying and selling, as a result. However, they also don't offer any guidance. In most cases, they charge a set rate for these services.

How does a discount broker works?

Retail traders sometimes enquire as to how cheap brokerage firms can charge such low trading costs. They operate under a different business model than full-service broking organisations, which explains why. In contrast to conventional brokers, they charge less for fewer services. They have a relatively small physical presence and offer their services online, which allows them to save money on staff and infrastructure.

Discount brokerage firms offer a variety of services, but the majority do not offer research, IPO application, or investing services in mutual funds, bonds, money market accounts, etc. They can also save money on resources and licencing thanks to this.

Various features of the discount broker

These brokers are focused on technology because they use online platforms to serve customers. Investors can technically perform trades by a website or app.

They don't offer stock recommendations or trading advice. Their brokerage fees are lower as a result.

Due to the fact that they only give investors a trading channel and do not offer any advisory services, their operating costs are modest.

Why are the discount broker's operating expenses so low?

Well, relationship managers are not appointed by Discount Brokers. Because of this, if an investor has any questions about the trading process or wants to receive some information, he should send a message to the company's email address or call them at the toll-free number the broker has supplied. They do, however, charge for call and trade services.Many discount brokers offer educational resources and tools that investors can utilise as a roadmap for investing.

Margin Funding: What is it?

Brokers offer a service called "margin funding" that allows investors to purchase shares worth more than they actually have available for investment. Consider a person who has $50,000 in their account and purchases 1,20,000 shares. As a result, the broker extends a loan to the investor in the amount of 70,000, which is the difference between the net amount of 1,20,000 and 50,000. Additionally, a predetermined rate of interest is applied to this sum.

Are discount brokers safe.

Online broker and discount broker are now essentially interchangeable terms. Discount brokerage unquestionably offers inexpensive access to investments that, over time, lower sunk costs. People have a preference for discount brokerage firms since they provide investors low-cost and simple-to-use platforms. In other words, sure, people have trusted discount brokers with their money and have saved and invested with them. All things considered, choosing a broker should be based primarily on safety, even though the low charge may appear attractive. To make sure you can trust the broker with your money and assets, it is advised that you conduct in-depth research on your desired discount broker.

Advantages of discount broker

One of their biggest advantages is a lower commission fee. Low commission fees are charged for their services. They provide a flat fee approach whereby brokerage is payable per order regardless of turnover.

Completely digital service - From account opening to placing orders, retrieving reports, etc., they offer a fully digital service. They typically use technology that is far more cutting-edge and user-friendly because they are online-based.

Learning resources and guides: Since young, tech-savvy investors prefer discount brokers, they put more effort into teaching new investors the fundamentals of trading and investing through webinars and videos.

Disadvantages of discount broker

Since most discount brokers operate online, those who like to transact in person and discuss their investments with a relationship manager might not find the discount broking business model to be alluring.

Customer service is minimal because there are no relationship managers available because they deliver services online.

Discount brokers also don't offer portfolio services. There's a chance that extra subscriptions will make it available.

Difference between full-service broker and discount broker in points

  • When opposed to traders who use full-service brokers, discount brokers typically charge a lower cost and offer service to traders who have a smaller amount of capital to trade with.
  • Full-service brokers offer a wide range of services to their clients in addition to simply executing buy and sell orders, such as trending subject research, sector and stock research, tax preparation, etc.
  • Most traders at discount brokerages are quite active and self-directed. As a result, the services are also focused on assisting such investors in routinely monitoring movements.
  • In contrast to discount brokerages, full-service brokerages have physical branches in numerous places and offer both online and offline services.
  • A full-service brokerage will charge a larger transaction fee than a discount brokerage.
  •  Because full-service brokerages have been around for a very long time, conventional traders may discover that they have a far superior trading experience than bargain brokerages. Young traders, however, can experience the opposite of this.
  • Full-Service Brokers are appropriate for people who have demanding personal and professional schedules and little free time for independent financial research. It also works well for new investors who have little to no experience trading stocks and need coaching at every stage of the trading process. Discount Brokers, on the other hand, are best for traders who are knowledgeable and capable of conducting independent research. Additionally, those who have competent financial advisors may choose bargain brokers.
  • Full-service brokers offer a wide range of services to the public and demand a hefty brokerage fee. Discount Service Broker, on the other hand, only provides essential services, which explains why their brokerage fees are lower.
  • Full-service brokers provide their clients more than just buy and sell orders. They offer a variety of services, such as sectoral and stock research, tax planning, and study on hot topics. Discount Brokers, on the other hand, are independent. They don't offer their clients advice services.
  • While the majority of cheap brokers only offer investments in mutual funds, commodities, equities, and derivatives. Under one roof, Full-Service Brokers provide investment in a range of financial products.


We compared full brokerage vs discount brokerage in this article. Both services, as seen above, have advantages of their own. Full service brokerage businesses will offer you investing advice in exchange for a higher price, whilst discount brokerage firms will give you all the trading tools you need for a minimal fee. Your needs are what really distinguish a bargain broker from a full service broker. If you possess the technical expertise to trade independently, a discount brokerage account can be the best choice. A full service brokerage account can be a better choice if you want to invest but lack the time. We hope this article will help you to understand the difference between discount broker and full service broker


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"Difference Between Full-Service Broker and Discount Broker." Diffzy.com, 2024. Wed. 17 Apr. 2024. <https://www.diffzy.com/article/difference-between-full-service-broker-and-discount-broker>.

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