Discount Broker vs Full Service Broker – Which one is the Best for you?
Discount Brokerage
A discount brokerage service provides the investor with the essential tools to trade in the stock market, but the brokerage firm offers no additional benefits. A discount brokerage account is what an investor would opt for if looking to learn investing skills. The discount brokerage account offers minimal fees, such as transaction and AMC charges, which are kept to a minimum. This way, an investor can apply one’s expertise to save on paying these additional fees.
Full-Service Brokerage
Offering the investors, the trading platform, and trading account in order to trade, further offering value through its advisory capacity. It provides its client guidance and advice on investing their money, how much to invest and where to invest. They also offer portfolio management services(PMS); a professional will ensure that an investor’s portfolio is regularly updated. The drawback is the increase in fees since it is as good as hiring someone else to do the trading for the investor.
Comparative Analysis | Comparison of Discount Broker vs Full-Service Broker
| Full-service Broker | Discount Broker | |
|---|---|---|
| Brokerage | Charges a percentage of the trade value & Offers low brokerage fees for high-volume traders. | Charges a flat & fixed fee on every executed order irrespective of trade value. |
| Brokerage Charges | 0.25% - 0.75% | Rs 10- Rs 20 per order. |
| Services | Broking Services, Research, PMS etc | Broking Services |
| Suitable for | Traders and investors who are in need of research, consulting and investment advisory services. | Tech savvy traders who want to cut costs on brokerage while having limited trading requirements. |
| Physical Presence | Branch offices in multiple locations in order to assist customers | Zero branch offices since no additional services offered |
| Customer service | Email/Call/Branch Servicing/Doorstep servicing etc. | Online services email/chat/phone |
| Examples | ICICI Direct, Kotak securities, Sharekhan. | Zerodha, Upstox, Trade Smart Online, SAS online. |
Who should choose which one?
Both services have merits of their own. While a discount brokerage firm will provide the investor with all the trading tools required for a minimal cost, full-service brokerage firms will offer investing guidance in exchange for a higher fee. The true difference between a discount broker and a full-service broker then is the investors’ needs.
An investor can start with a simple exercise to decide, answer the following questions
- Do you require research advice & guidance on stocks and other trades?
- Are you a high-volume investor, with trades running in crores every year?
- Do you need assistance & consulting service on trading?
- Do you prefer face-to-face & personal customer support for addressing issues?
If the answer is Yes for all the above questions, then it would be better to choose Full-Service Broker and if the answers for the following questions are Yes then it would be better to choose a Discount Broker
- Do you pick stocks you wish to invest in on your own?
- Are you online & tech-savvy?
- Are you an experienced & seasoned trader who doesn’t need much trading assistance?
Do you want to cut down on your brokerage charges?
Top 10 Discount Stock Brokers In India Based On Number Of Customers (In Lakhs)
| 1 | Zerodha | 63.96 |
| 2 | Upstox | 57.68 |
| 3 | Groww | 40.63 |
| 4 | Angel One | 37.91 |
| 5 | 5paisa | 17.18 |
| 6 | Paytm Money | 4.34 |
| 7 | Alice Blue | 1.48 |
| 8 | Fyers | 1.29 |
| 9 | Bajaj Finserv | 0.95 |
| 10 | SAMCO | 0.77 |
Top 10 Full Service Stock Brokers In India Based On Number Of Customers (In Lakhs)
| 1 | ICICIdirect | 30.31 |
| 2 | Kotak Securities | 12.56 |
| 3 | HDFC Securities | 11.41 |
| 4 | IIFL Securities | 11.32 |
| 5 | Motilal Oswal | 8.96 |
| 6 | Sharekhan | 7.64 |
| 7 | SBI Securities | 6.35 |
| 8 | AxisDirect | 4.22 |
| 9 | Choice Broking | 2.53 |
| 10 | Geojit | 2.34 |
Happy Investing! We hope this Comparison of Discount Broker vs Full Service Broker helps you to understand which one is the best for you. If you need any assistance on Investment or How To Invest In Mutual Funds Feel free to contact Wealth Baba – Financial Planner & Investment Advisor in India. We will try to help you out in the best possible way.
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