In commerce, a broker is a party that mediates between a buyer and a seller. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Distinguish agent: one who acts on behalf of a principal. A brokerage or a brokerage firm is a business that acts as a broker. A sales person working for a securities or commodity brokerage firm is popularly (but incorrectly) called a "broker." A broker in that context is, strictly speaking, an exchange member who actually executes the purchase or sale order in the pit, on the exchange, as a service to the client of the firm for which that salesman works. A broker is a party that mediates between a buyer and a seller. ... This article does not cite any references or sources. ... A buyer, sometimes called a merchandiser, is a person who purchases finished goods, typically for resale, for a firm, government, or organization. ... Sales, or the activity of selling, forms an integral part of commercial activity. ... Agency is an area of law dealing with a contractual or quasi-contractual relationship between at least two parties in which one, the principal, authorizes the other, the agent, to represent her or his legal interests and to perform legal acts that bind the principal. ...
Discount brokers (such as E-Trade, Scottrade, and Ameritrade) have taken a large share of the business by offering highly discounted commissions, but the companies do not offer investment advice in return--all they do is execute orders.
Using a stock broker for active management of a Stock/Mutual Fund Portfolio may be unnecessary when a passive management alternative is available for long term investing within the confines of a Tax-Sheltered Retirement Accounts.
Thus a conflict of interest arises concerning a stock broker who offers his/her service as a financial planner, because their revenue is generated as a direct result of your investment in the stock/mutual fund that they broker to you.
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