Brokerage Definition
There are some people who are not familiar with brokers and what they do. Oftentimes, they might ask for a brokerage definition so it will be clear on their mind. Simply put, a broker applies to a person or a firm that charges a certain fee or commission for properly performing a deal, whether buying or selling of a product or service, for the benefit of his clients.
People usually see a broker as the third party in many business deals. They are the ones responsible for the buyer and seller to meet and come up with an agreement. In return for his services, his clients can either pay him a professional fee or a commission based on their previous agreement.
In general, a broker works independently, making it possible for both parties to meet and to discuss business deals. One of his major functions is to look out for potential clients wherein he can make his business proposals or offer his current client’s services. Some brokers can also give you advice on the best moves that you can make in order to make a profit. A good example of this are stock brokers that advises clients whether to buy, sell or maintain their current stocks based on his expert understanding of the market.
Brokers are not new in the business world. The art of brokering has been present since the Middle Ages, if not older. The word Broker was derived from the Anglo-Normandian word of “Brocour” meaning “small trader”. The word may also come from the Old French word “Brocheor” referring to wine retailers.
Advantages of Hiring a Broker
Without brokers, many business transactions would not take place. Here are some of the advantages of hiring a broker.
• Cost efficient
Brokers are usually paid on a project basis. And as such, you would only be paying your broker after a transaction is finished and not by means of a monthly payroll.
• Market Expertise
A broker knows the business very well. A good broker can give you their expert advice based on their experience and broker training. They also have a lot of connections that can help you out on your current needs such as moving of goods or acquiring a loan.
They also have a large network of clients. These clients can either be your potential buyer or your potential seller. He can make arrangement and schedule a meeting between you and a buyer or seller.
Common Types of Brokers
• Business broker
• Customs broker
• Freight Broker
• Real Estate Broker
• Information Broker
• Insurance Broker
• Mortgage Broker
• Prime Broker
• Stock broker
Broker Licensing and Training
Many fields of brokering are regulated by law or by a certain government agency. Stock brokers, Freight brokers, and Mortgage brokers are some of the types of brokers that need licensing or accreditation from the government.
For the most part, brokerage firms would also want to hire people with a bachelor’s degree and experience in Economics, Business Administration and Finance. But even a high school diploma can be enough for one to start offering his brokerage services. All he needs is to go to a proper broker training school to learn the basic of brokering, and fill up the necessary forms for his broker certification or license. A career as a broker can be very fulfilling and rewarding.
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