A stock broker can help you with the logistics of making your investments. A mutual fund agent also can help you do the same. From a regulation standpoint, brokers are not supposed to act as investment adivsors.
They are quite helpful in helping new investors get onboarded and the customer service is usually personalised. Brokers get compensated via a small brokerage that is paid out of every transaction. In case of mutual funds this is called commission which is paid out of the amount that remains invested (not per transaction).
Most small brokers and agents need to survive in order to provide the service and the brokerage/commission helps. The larger ones have a higher cost structure and more often end up selling higher ticket products that have other costs layered in, usually in an indirect manner; that is deducted after the money is transferred to the fund manager. This is how all PMS, AIF and even Mutual Funds work.
With the massive change in investor behaviour due to online-everywhere-everything, many people are preferring doing things themselves on the mobile phones and computers.
Lets take the case of stock brokers. With online discount brokerages that are offering zero brokerage plans, most new investors these days do not need to speak to a human broker for their stock investments.
These online brokerages have seen massive growth. However, new regulation may disintermediate even them; that is if exchanges allow investors to directly purchase stocks on their own from a BSE or NSE, then why does one need even an online broker?
The challenge for the exchanges is to provide decent enough customer service. With online evolving, this is less of a problem using technology. How many times do you need to get customer service with a large e-commerce provider like Flipkart or Amazon where there is physical delivery of goods? With a digital service like stock trading, the customer service requirements will be much lesser. So it is a matter of time, and these times are interesting.
If stock trading will become all the more ubiquitous then the endeavour of making money will become rarer. For that you may want the advice of a trusted advisor who does not take custody of your money or charge hidden fees. Click on my profile to know more.
