this is silly- it should only go under discount broker
- I agree. Even Discount broker is a redirect to Stock broker. This one should be too. There aren't very many notable differences between a discount broker and a deep discount broker. If you ask me, it almost sounds like a marketing term, but I suppose it's useful for categorizing brokers. The Stock broker article should say what is meant by discount broker. --Mysidia (talk) 03:58, 23 June 2009 (UTC)
Discount brokers generally offer as the term implies a discount to the standard commission. A broker is an intermediary between a client and a provider. A broker usually acts on behalf of the client and has more than one provider. Brokers in finance often act differently to the 'ordinary middleman' in commerce. The perception of the public is that by going 'direct' to a provider they get a better deal. However in finance this is very often not the case particularly when a customer uses a discount broker. The discount broker either enhances an investment or reduces the price of a product- or he sends cash back to the client once the service has been provided. The discount broker shares his commission with the client. It works very efficiently if the client understands what he is doing. Providers in finance have to protect their major source of business; general brokers. If they offer a better deal to the public by allowing a better deal by going direct, brokers will stop giving them business and use a different provider. Commission can be a very economic and effective means of remuneration. If a broker does not give the provider business, the provider does not pay him commission and the provider has no additional overheads like offices and salaries. It is a way for providers to offer their products to markets which may be inaccessible to them. The broker generally ensures the deal he is offering to his public is competitive. All in all it is an efficient means of providing products to the market- not perfect but it works. What most consumers do not realise is that the commission is negotiable, he who asks generally gets, but if you don't ask you can hardly expect the broker to tell you! Discount brokers largely rely on price, or commission share, as the determining factor for sales. Clients are, in the main, sophisticated, they already understand the product, need little pre-sales and after sales assistance. Think of it like a brand bought from a discount mall- where you buy it makes little difference to the customer- if there is a problem with the product they can go straight back to the provider rather than the discount mall. Discount brokers are like a niche player. There are various sub groups: Life insurance Stocks Offshore investments Isa’s etc... To confuse the market still further some providers (who are not necessarily that good) promote the fact that they don’t deal with middlemen. This plays on the ‘fear and greed’ factor in sales. Equitable life (R.I.P) UK was a classic example of this. It was almost a Ponzi scheme-for years they advertised like mad, paid bonuses on an opaque product –‘with-profits’ which were way above what others providers paid and hammered the phrase “we don’t pay middlemen”. In the end a lot of wealthy people came unstuck. The internet will play an increasing more important role. Information becomes much more freely available and discount brokers will become much more prominent. The market will become more commoditised- commissions will reduce, inefficient providers will fall by the wayside, all in all that’s great for the consumer.