You have decided to invest in the stock market. Now how do you go about getting started? Can you buy and sell shares on your own? Do you need to work with a stockbroker? This guide will help you better understand the role of stockbrokers in stock market trading, why you may need one, what they can do for you, and how you can find a qualified professional.

Is a Stockbroker Necessary?

Yes and no. Most investors can’t simply choose to trade stocks on their own (unless they happen to be a stockbroker themselves). That would be neither practical nor possible. For example, trades through the Australian Securities Exchange (ASX) must go through a broker.

That said, you may not need a personal stockbroker to get started. There are multiple investing options available–the two most common being trading through local stockbrokers and using online broker services which give the investor more control.

What Does a Stockbroker Do?

If you choose to work directly with a stockbroker when investing, you will need to choose between two types. The type of stockbroker you work with will determine what their role actually is in your stock market trading. The two types of brokers (or brokerage firms) are:

•    Full-Service Brokers – These stockbrokers do more than just handle your actual share trading. They also offer you financial and investment advice, such as recommending specific stocks. You will pay higher commissions for full-service brokerage firms.

•    Discount (or Non-Advisory) Stockbrokers – These brokers or firms are less expensive to work with, but offer fewer services. They won’t walk you through the process of stock market trading, and they won’t give you additional financial advice. They just handle the actual trades you choose to make. Discount brokerage firms are most appropriate if you already know a great deal about investing, and can research and choose stocks on your own.

How to Find a Licensed Stockbroker

Traditional stockbrokers, as well as online brokers, should be licensed by the Australian Securities and Investments Commission (ASIC). When choosing a stockbroker to work with, you should start by using the ASX broker referral service. You can then verify that a broker is licensed (or employed by a licensed firm) by searching the ASIC database of licensed stockbrokers.

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