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Difference Between Stock Brokerage and Investment Management



The investment services industry can be intimidating and ambiguous for people looking for a return on their capital. After working hard with your wealth, it is important to understand the different services offered by professionals and what solutions match you personally. One of the main questions we have asked is:

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"What is the difference between investment management and stockbrokers?"


First of all, discuss what are inventory stocks - we all have a much better, clearer, an idea of ​​what they do and who they represent. Trade values ​​are regulated businesses offering financial advice to their customers. A StockBroker buys and sells actions and other securities such as obligations, CFDs, futures and options on behalf of their clients in exchange for fees or commission. A broker / stockbreker will receive charges on each transaction, which the idea is profitable or not.


A broker can specialize in any investment niche they want for example:


  • FTSE All-Share Stocks,
  • Stocks of objectives,
  • European stocks,
  • Asian stocks,
  • American stocks
  • Combinations of the above
  • Right actions,
  • Derivative Rights Trading (CFD, Futures and Options)


The main reason investors choose advantageous values ​​on any other professional investment service is simply to control. Due to the nature of a brokerage business, they can only execute a trade after they have asked them to do so. This means that it is impossible for a broker to continue buying and selling titles without knowing - known as commutation to the Commission. However, this does not prevent stock stocks that provide you with several new ideas per week and spend your positions on a new idea.


However, there are natural defects with the brokerage industry, because because bargaining ideas can only be executed after asking to list some defects; -

You risk failing good opportunities because of its market movements,

You can enter a few days later because you were busy and do not make money after fresh,

You can receive a call to close a position but incapable of you without saying.

The foregoing are examples that can occur when investing with brokerage firms, but this is due to the dependence of the gain authorization of their customers. So, if you are ultra busy or travel a lot, you could potentially miss opportunities to buy or sell.


What are the investment managers?


We now understand what are Stockbrokers / Brokerage, discuss what investment management services can do for individuals.


Investment management companies operate differently to brokers. The essential aspect of these services is that professional investment managers use their discretion to make investment decisions. As a client of an investment management firm, you will pass by a rigorous client on the boarding process (such as a brokerage company) to understand your investment objectives, understanding the services used, the risk profile, The anger of the investment mandate and allow the service service. Manage your equity portfolio. Registration with the service may seem long, but it is in your interest to ensure that the service is appropriate and appropriate for you. In fact, it's not a long process at all. Once you have accepted the services offered, you will only be updated on current account data and portfolio reports in due time. This means no phone call to disrupt your daily activities and allows professionals to focus on your portfolio.


Investment management companies usually have specific portfolios with a track record, in which you can invest your capital according to your risk appetite. These portfolios will focus on specific securities, savings, risks and types of investment (income, capital growth or balanced). All this would be discussed before or during the application process.


Another method used by investment management companies is different strategies implemented by their portfolio managers. These strategies are systematic and spend in-depth analysis before investment decisions are made.


The expenses generally associated with investment management companies may vary from each company. There are three types of current fees and are generally combined, fees can be; -


Assets under management tariff - This is where you pay a percentage of the portfolio per year to the company, usually an annual tax. E.g) 1% of the costs of $ 1,000 000 are £ 10,000 per year.

Transaction fees - This is a tax associated with each transaction made via your portfolio - similar to the brokerage firm.

Percentage of profits: This is where closed profits generated over a fixed term will be charged to society. E.g) 10% of pop costs - The company allows you to close 10,000 £ in one quarter - you will be charged from £ 1,000.

The main advantages provided by investment management companies are that after the service understands your needs and adapts the service around you is their work to build a portfolio around you. It is also the work of the investment management company to join the investment mandate you accepted, we will take it on this subject later, so that you understand the time limit for what you should expect. Another bonus Why high value individuals choose investment management services is due to the fact that they are not traced by phone calls every two days with a new investment idea.

The difference…


The main difference between investment management and storage companies is:


Investment managers offer discretionary services; No regular phone call on stock ideas.


Business values ​​give you more control because you can personally filter the ideas you think you do not work.


Investment managers provide an investment mandate; This is where the investment management service provides a document of what they offer you back to the management of your portfolio. You will understand what they target exactly the year, based on what risk, and should they do it - so they have completed their service. E.g) The mandate could indicate that the strategies used and based on volatility of 8% (risk), they seek to reach 14% capital yield.


Business values ​​do not offer future agreements, but seek to offer growth during time with them. They are not bound by their performances such as investment managers.


Investment management companies have a follow-up assessment for all the strategies and services used, the schrokers do not do it.


Who to choose?


Both services provide professional approaches to invest in stock markets. Trade values ​​are chosen on investment managers by people who like to be in control and receive financial advice. Commercial values ​​generally do not have a systematic approach to markets, but use selective choice approaches to select stocks.


Investment managers are chosen by investors who want an agreement on their performance during the year and understand the risk beyond. Generally more sophisticated investors wishing to take advantage of the record and acquire an understanding of the systematic approach used by the investment management firm.


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