What is a Securities Corporation?

Jessica Hobby

A securities corporation is a business that provides financial services in relation to securities such as stocks, bonds, futures and options. Securities corporations, sometimes called brokerage houses or firms, are authorized to mediate the buying and selling of securities. They typically offer a wide range of products and services for which they charge a fee or take a commission.

Securities corporations provide financial advice.
Securities corporations provide financial advice.

Although a client may contact a securities corporation and communicate their investment choices, most companies offer personal service that includes a wide range of financial planning. Some corporations specialize in certain areas, while others may offer a wide range of options. Financial planning includes areas such as cash flow management, investment planning, risk management, insurance planning, tax planning and retirement planning. These services are executed through the products that a securities corporation offers to its clients.

Some securities corporations offer real estate limited partnerships.
Some securities corporations offer real estate limited partnerships.

Investments are the most common products offered by a securities corporation. Investments may include the buying and selling of simple securities such as stocks and bonds or more diversified investments such as mutual funds, hedge funds and venture capital funds. In many cases, securities corporations will partake in institutional trading, which occurs when they buy and sell securities in large blocks for their clients or the large blocks are part of funds that are managed by the corporation.

Risk management services offered by securities corporations offer clients the opportunity to transfer financial risk to other entities. Corporations evaluate risk through market research that provides a cost versus benefit analysis which allows a business or individual to make an educated decision about their investments. Extremely wealthy clients may be able to afford to take more risks than those who are investing on a significantly smaller scale.

Some securities corporations also offer real estate limited partnerships (RELP) or real estate investment trusts (REIT). These investment options involve a group of investors who develop and build real estate to generate income. They are often popular with extremely wealthy clients because they offer high potential growth, income and shelter from taxes.

Tax planning is another area of financial planning where some securities corporations offer advice. The strict laws that govern taxes and securities in most countries force securities corporations to be knowledgeable in this area, so investors may protect their cash and non-cash assets. Tax planning specialists offer advice to clients on how to legally avoid taxes.

Another common service offered by some securities corporations is retirement planning. Firms offer products such as 401(k) plans, profit sharing plans, simplified employee pension plans (SEP) and individual retirement accounts (IRA) for their business and individual clients. Securities corporations may also offer insurance investment opportunities such as life insurance and annuities.

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