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What is a Deposit Broker?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 25 August 2016
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A deposit broker is a person who provides financial services in the form of selling investment certificates, term deposits, government bonds, and certificates of deposits. While people can purchase these things directly, going through a broker can have certain advantages, including access to better rates than might otherwise be available. Deposit brokers can work independently or for brokerage agencies and they must be licensed by regulatory agencies in order to practice.

The deposit broker arranges deposits of client funds in insured institutions, selecting investments that will meet the needs of clients. Brokers meet with clients to discuss what they need from an investment and to offer information and advice about different products available. Some things a deposit broker considers are the need for liquidity, the risks a consumer is willing to be exposed to, and the kinds of rates currently available. These financial professionals must keep on regulations and new developments in the market in order to offer the best service to their clients.

Deposit brokers can sometimes negotiate better rates of return on deposits. They do so by purchasing large blocks that consumers wouldn't be able to buy on their own. The financial institution offers a favorable interest rate in return for the big investment and the broker passes this on to customers. Broker focus on identifying and securing low risk investments for their clients and are required to work with insured institutions that are also in good standing.

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Like other people who work in the financial industry, a deposit broker is expected to conform with certain ethical standards. These include handling client funds responsibly, making sure that clients are fully informed about their finances, and being available to answer questions and assist clients with decision making. While a deposit broker is not required to pass an examination in order to work, regulators can choose to suspend a license to work or sanction a broker if they believe that there are grounds for concerns.

When selecting a deposit broker, consumers should confirm that the broker is licensed and in good standing. It is advisable to ask questions about the types of investments available, their terms, and their restrictions. Consumers can also ask about the institutions the broker works with, and may look these institutions up to confirm that they are insured and in stable financial health. A reputable broker is always happy to provide information that will help clients reach an informed choice.

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