A Discount Broker is one who charges much less for a trade than a Full Service Broker. They are able to do this, because they have unbundled the cost of trading from research and portfolio advice and charge you only for what you use.
Many years ago, there was a fixed schedule for the commissions brokers had to charge clients. The regulations changed and brokers were able to set their own commission structure. Some of them chose to cater to do it yourselfers and charge only for the trading. Because the brokers did not need to have analysts and portfolio managers on their staff, they were able to charge significantly less.
Discount Brokers have begun to add services that you can pay for in different ways. For instance, if you keep a certain balance or do a certain number of trades with the broker, you are allowed to access research reports, or trade at an even greater discount, or consult with financial planners for portfolio advice.
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