Overview of the Financial Broker Sectors
Financial brokers in the financial services industry help buyers and sellers sort out commercial exchanges, in return for a commission. Their primary role is to match up potential buyers with sellers (and visa versa), advise on negotiation tactics (if appropriate), responsibly advise products or services choices, and ensure administrative is compliant and efficiently handled. Most financial brokers are highly regulated by their respective industry regulators, who license brokers to operate and comply with rules and regulations governing standards of care and behaviour. Brokers operate in a wide range of financial sectors, to facilitate a huge range of transactions from property, to insurance and bullion.
Brokers normally act exclusively on behalf of either the buyer or the seller. Most brokers act on behalf of the seller to provide product information and pricing from selected financial institutions. For example, an insurance broker may be restricted to offering only selected policies underwritten by a large insurance company. Other insurance brokers may have their own 'binding authority' and be authorised to offer specific advice on insurance policies that might meet the buyers individual insurance needs.
As so many financial products are sold online these days, nearly all businesses that use the Internet to sell financial products act has intermediaries on behalf of an institution. Most need to be highly regulated and licensed. This regulation may restrict online-only brokers from offering written financial advice as well as limit the range of product options potential buyers can click on buy from the brokers' website.
There are hundreds of thousands of brokers operating around the world. Many are members of their countries national trading association. Many have had to pass minimum qualifications and have undergone background checks before being licensed to trade. These provide consumers with the reassurance they are dealing with a qualified person who is authorised to undertake a financial 'fact find', store sensitive client data and offer financial recommendations.
Using a financial broker (such as an independent financial adviser), provides potential clients with many advantages. For example, brokers have established personal relationships with contacts within a range of financial organisations. Consequently, they may be to help speed up the paperwork (such as a mortgage broker chasing through a mortgage application). Mortgage brokers play a key role in helping homebuyers find competitive residential mortgages or commercial loans, and a product that is most suited to their needs.
In most countries, financial brokers are required to explain to customers how they receive their commission. Most brokers receive a percentage of the ongoing revenue stream generated from selling while others prefer to charge an upfront flat fee for their advice and guidance. Some types of financial brokers ( such as commodity brokers or stockbrokers) receive commission after implementing an order to buy or sell contracts on behalf of clients. A lot of this is done over the telephone. However, much online broking is now completely automated through an online broker website. Customers pre-agree the terms and conditions upon which they are allowed to trade through the stockbrokers website. These terms may include trading charges, broking limits and basis of trading that clients must agree to before being able to login and buy or sell.
A business broker is a term which is used to describe an individual or firm who helps individuals or businesses buy a business. Many are known as business transfer agents. They specialise in promoting businesses for sale, short listing potential buyers, assisting in the business valuation, implement due diligence processes, and steering negotiations through to a sale.