Online trading in the stock market involves the buying and selling of shares. Whenever an investor opts for online investing via a trading platform, they require the services of a broker. To be able to make an informed decision regarding selecting a broker, it is a must to understand the basics of stock trading, especially online stock trading.
Brokers act as an agent between investors and the stock market. The Securities & Exchange Board of India (SEBI) is the governing body that regulates the functions of its registered members, or brokers. To facilitate buying and selling of stocks in the stock market, brokerage firms are important.
There aren’t many benefits of using a discount broker vs a full-service broker. And using a full-service broker vs a discount broker, depending on one’s needs. Market research and market data, real-time data, live filters, custom watchlists, and price alerts are some of the benefits of using these brokerage firms.
Let’s discuss a full-service broker and a discount broker in detail now.
Read more: Best Forex Brokers in India
What is a Discount Broker?
If an investor is looking for a budget-friendly, economical brokerage for online trading of shares, then discount brokers are ideal. Discount brokers in India are technology-driven and function at comparatively low operational costs than full-service brokers.
One of the key factors to note is that discount brokers in India provide a trading platform for online investing but are not into advisory or client-relationship management services. Hiring a discount broker is more like doing online trading on your own.
When it comes to full-service broker vs discount broker, remember that the discount broker gives higher returns at a low cost. These brokers are fast and use a technology-based approach. Zerodha, 5paisa, and Upstox are some examples of discount brokerage firms that offer brokerage-free equity delivery trading and direct mutual funds
Top 10 Discount Brokers 2022
| Rank | Broker | Active Clients |
| 1 | Zerodha | 5,941,369 |
| 2 | Upstox | 4,878,842 |
| 3 | Groww | 3,324,610 |
| 4 | Angel Broking | 3,060,398 |
| 5 | 5paisa | 1,579,931 |
| 6 | Paytm Money | 342,802 |
| 7 | Alice Blue | 150,029 |
| 8 | Flyers | 108,718 |
| 9 | SAMCO | 79,737 |
| 10 | Master Trust | 54,599 |
What is a Full-Service Broker?
Full-service brokers go all-in when providing their services. They have several offices across the nation, which clients can visit at any time for queries and support.
The services that they offer include the following: portfolio management services, wealth and financial planning services, and advisory and client-relationship management services. They conduct extensive research into the trading of commodities, stocks, and so on. It is to be noted that some full-service brokers may even have the facility of self-owned Demat and banking services. While tipsy shading between discount broker versus the full-service broker, remember that the full-service broker provides other services like retirement planning, investment planning, etc. They tend to benefit their customers with guided research. They also provide Tips on tax savings. ICICI, HDFC, and Sharekhan are some examples of full-service brokerage firms that provide 3-in-1 banking services accounts.
Top 10 Full-service Brokers 2022
| Rank | Broker | Active Clients |
| 1 | ICICIdirect | 2,869,732 |
| 2 | Kotak Securities | 1,153,654 |
| 3 | HDFC Securities | 1,079,879 |
| 4 | IIFL Securities | 984,166 |
| 5 | Motilal Oswal | 812,506 |
| 6 | Sharekhan | 768,631 |
| 7 | SBI Securities | 521,677 |
| 8 | AxisDirect | 391,816 |
| 9 | Geojit | 234,897 |
| 10 | Choice Broking | 194,395 |
Differences Between a Discount Broker and Full-service Broker
Listed below are some pointers that tell the difference between a full-service broker vs discount broker:
- Full-service brokers will provide extensive services right from providing a trading platform to advice for bonds, mutual funds, and stocks.
- The purpose behind their approach is to provide the necessary information.
- The average cost of brokerage for full-service brokers is between 0.3-0.5% per trade.
- In this case, physical customer service is available as they have multiple branches across the country.
- Those who are looking for all investment products under the same roof along with advisory services can opt for full-service brokers.
- Discount brokers, however, only provide a trading platform and free trading software. They do not conduct any additional research.
- Discount brokers offer a flat fee to their clients for every trade executed.
- The brokerage charged by discount brokers starts from as low as Rs.20 per trade and it does not vary according to the order value.
- They do not offer many investment products and mainly cover mutual funds and stock investments.
- For investors who are looking to learn and conduct their own research, a discount broker is ideal. Discount brokers are beneficial for new investors.
Read more: Best Online Trading Brokers for Beginners
Advantages and Disadvantages of Discount Broker vs Full-Service Broker
We are listing a few advantages of different factors between Discount Broker vs Full-Service Brokers:
| S.No. | Advantages and disadvantages of Discount Broker | Advantages and Disadvantages of Full-service Broker |
| 1 | Brokerage charges are less compared to a full-service broker | Brokerage charges are generally higher compared to discount brokers. |
| 2 | Transaction cost is less | Transaction cost is higher. |
| 3 | Brokerage plans are the same for low and high-volume traders | Brokerage plans are different for low and high-volume traders. |
| 4 | No RM supports | Dedicated RM support is provided. |
| 5 | There are no branch services | Branch offices are at multiple locations. |
| 6 | There is no research advisory and any other investment services are provided | It offers research, advisory, and other investment services. |
| 7 | Brokerage charges are generally Rs 10- Rs 20 per order | Brokerage charges are 0.25% – 0.75% |
| 8 | Examples: Zerodha, Upstox, Trade Smart Online, SAS Online, Tradejini, etc. | Examples: ICICI Direct, Kotak Securities, Sharekhan, HDFC sec, Axis Direct, Edelweiss, etc. |
When to choose a Discount Broker and a Full-service Broker?
When it comes to choosing the right broker for yourself from Discount Broker to Full-Service Broker, one must consider a few points such as:
1. Best Brokerage Deal
Remember that Money saved on brokerage is profit achieved. You don’t have to pay more brokerage to a full-service broker if you don’t want any advisory research or any add-on services.
2. Trading Losses
Uninformed trading decisions are always the biggest losses. That means you should not be going with a discount Broker if you do not have time to pick up your stocks.
3. Assistance With Trading
If you need research advice on stocks and other trades, then a full-service broker is the best to go with.
4. Face-to-Face Customer Support
If you prefer face-to-face customer support for addressing issues, the full-service broker is again the better choice to go for.
5. Trades In Crores Every Year
If you are a high-volume trader who trades in crores every year, again full-service broker will be the right choice.
6. Online Or Tech-Savvy
If you are online savvy, a discount broker is a better choice for you.
7. Picking Stocks
If you can pick stocks on your own, then a discount broker is the better choice for you. Understanding your trading needs, looking at the advantages and disadvantages of discount broker vs full-service broker, and comparing the services of full-service broker versus discount broker will let you decide on which broker to invest with.
Conclusion
A discount broker can be the right choice for someone ready to invest their own time and knowledge in handling the stock market without requiring any additional assistance.
For investors who can afford to pay extra brokerage fees as commission as well as require advisory services, full-service brokers are recommended.
The final decision is entirely dependent on an investor’s individual needs and requirements and what suits them best. As it is can get good value for money.
In this article, we have discussed discount brokers vs full-service bookers and we hope you make a good choice while trading. Wishing you all happy trading!!
