A Broker and Dealer ? Definition Of Both

In the financial world, we may hear the terms : Broker & Dealer, and think they are the same.. Well, they are not the same 🙂

The main differences between both terms are :

– Their roles in the market – mostly securities & shares markets .

– The capital required to do their jobs.

Let’s define things more in details :

** A broker is a person who executes the trade on behalf of others, whereas a dealer is a person who trades business on their own behalf **

** A dealer will buy and sell securities, commodities or currencies on The Client’s account. But , the broker will buy and sell securities, commodities or currencies for their clients.

So, the broker works by your instructions only, and gets his/her pay accordingly ( commission, spreads or else ), he won’t interfere if your decision brings you profit or not, and doesn’t take responsibility for the results accordingly.

But dealers gain profit when you make profit , they are like partners for you – when trading securities or related shares, etc … ) . The broker could have assets of their own , and would trade them separately on a later age.

Think of dealers as middle person, not highly experienced nor he/she acts alone. And takes commission for his work regardless of its impact on your wallet ( or shares , else … )

Resources of benefit?

Is the broker an advisor ??

Well, no he is not exactly !!

The broker wants to sell you a service or a product ( mostly in shares and financial world ) , and benefits from that – profit by transaction.

But the advisor is the person who gives you advises on certain acts, market trends, a strategy to follow, or the “cheaper” way to handle a certain matter. The broker may do transactions on your behalf, but he / she won’t be – legally able to give you advises on the trade or the market’s situations.

In major corporates, head managers need advising specialists and people who can overview the circumstances ( each in his/her specialty field ) and give an advise that would result in better goals achievement , here comes the advisory board.


What is the advisory board?

Based on Advisory Board Central : “An Advisory Board is a structured and collaborative method for organizations to engage with external advisors. Advisory Boards act as a sounding-board for either the owners, directors or shareholders of a company.”

Other names for the “Advisory Boards” include: Advisory panel, Steering committees, corporate think tanks or even board of advisers.

People in meeting

The Purpose of Advisory Boards

The purpose of most Advisory Boards is to help the organization gain new insights and provide solutions for the problems the corporate is facing, and to explore new opportunities by birds-eye view of the total situation , and combine that with deep experience and knowledge too.

The “Advisory Board” does not make decisions, provide the management with critical thinking and analysis to increase the decision’s outcome, and reduce the risks and negative impact of them.

The specific roles, responsibilities and expectations are normally established within the Advisory Board Charter – ( Board’s terms of reference ) , as well as other instructions / protocols set by the corporate’s owners or Board Of Directors.

Big corporates can have internal or external advisors; experts who are not official staff of the company – and are paid by projects or advises they offer . Their working schedule isn’t fixed or full-time, and their results aren’t always adaptable or successful, since they are not fully aware of the internal factor guiding the corporate’s operations.

And there are the internal advisors, who are corporate’s staff working full-time inside it. They know the business from inside, and can be working in different department in the corporate , giving richer and more adaptable advises and knowledge power for the decision makers of the

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