What is an Investment Broker-Dealer?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 26 August 2019
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An investment broker-dealer is a financial professional or investment firm who aids investors in buying and selling different types of securities in various marketplaces. A person or firm that offers this wide range of services is normally certified to conduct transactions on many different types of markets, including stock markets and currency markets. In addition, an investment broker-dealer may manage this process by either executing orders on behalf of clients, or conduct the trading using a dealer account. From this perspective, the services offered by a broker-dealer are wider than those of a professional who is recognized as a broker or as a dealer.

One of the benefits of working with an investment broker-dealer is the ability to manage investments of all types through a common resource. Owing to the nature of the range of transactions they can conduct, broker-dealers offer the benefit of being able to assist clients with securing a variety of assets. For example, an investment broker-dealer can aid a client in purchasing various stock options, aid in the securing of a few bond issues, and also manage currency trades on a foreign exchange market. This approach makes it unnecessary for the client to work with several different firms or individuals to engage in the type of investments desired.


Another advantage of working with an investment broker-dealer is the ability to manage fees and commissions associated with different investments through a central account, rather than maintaining accounts with different brokers and dealers. This makes it much easier to track progress with all the current investments, as well as quickly make changes to the portfolio if a developing market trend is found to be unfavorable. Depending on the situation, the investor can work through the broker-dealer to quickly sell off shares of stock that are anticipated to begin dropping in a few days, and divert those funds into bonds or even into the currency market, all by initiating a single communication with the firm or individual. This approach makes it much easier to move quickly to minimize losses in one area of the portfolio while also increasing returns in another sector.

In some cases, an investment broker-dealer may also provide competitive pricing on various transaction fees. Here, the benefit is lower fees assessed on the various transactions involved, usually amounting to saving the investor a significant amount of money over the course of a year. This is particularly true for investors who aggressively trade in several different markets, and tend to accumulate a lot of fees in a relatively short period of time.


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