Many investment options require that you negotiate your trades or buy and sell through a broker. A broker is essentially an intermediary between you and the investing world. Brokers can be organizations (Charles Schwab, Merrill Lynch, E*TRADE, and so on) and individuals.
Although the primary task of brokers is to act as the intermediary, they can perform other tasks as well, such as:
Providing advisory services: Investors pay brokers a fee for investment advice.
Offering limited banking services: Brokers can offer features such as interest-bearing accounts and check writing.
Brokers make their money through various fees, including the following:
Brokerage commissions: This is a fee for buying and/or selling stocks and other securities.
Margin interest charges: This is interest charged to investors for borrowing against their brokerage account for investment purposes.
Service charges: These are charges for performing administrative tasks and other functions. For example, brokers charge fees to investors for individual retirement accounts (IRAs) and for mailing stocks in certificate form.
Any broker you deal with should be registered with the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). In addition, to protect your money after you’ve deposited it into a brokerage account, that broker should be a member of Securities Investor Protection Corporation (SIPC).
SIPC doesn’t protect you from market losses; it protects your money in case the brokerage firm goes out of business. To find out whether the broker is registered with these organizations, contact FINRA, the SEC, and SIPC.
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Source:http://www.dummies.com/how-to/content/what-does-an-investment-broker-do.html
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