What is Execution Only or Discount Broking?
Execution-only services or discount brokers are authorised as independent financial advisers and regulated by the Financial Services Authority. It may sound like a contradiction, but a discount broker is simply an independent financial adviser that does not give advice. Discount brokers, receive high levels of initial and renewal commission from investment and life assurance companies due to a high volume of business. They also operate on lower margins than independent financial advisers because they do not give specific advice so do not have to pay for the services of an adviser. In order to offer discounted plans and investments, the brokers sacrifice some of their commission to benefit the investor. This commission is reinvested to improve the investment.
