Broker

A broker is a financial service provider who acts as an intermediary between investors and the financial markets. Since private individuals are generally not allowed to trade directly on stock exchanges such as the SIX Swiss Exchange or the New York Stock Exchange (NYSE), they need a broker to execute buy or sell orders for securities such as stocks, ETFs, or bonds.

Today, a distinction is made primarily between traditional house banks and specialized online brokers, often referred to as neobrokers. While banks often offer personal advice, online brokers are characterized by significantly lower fees and purely digital processing. A broker's income is usually generated from order fees (brokerage fees), custody account management fees, or so-called spreads (the difference between the purchase and sale price). Depending on the business model, payments for order flow also play a role. You can read more about this controversial practice here.

In Switzerland, brokers are subject to strict regulations by FINMA, which ensures the security of client funds. For investors, the choice of broker is crucial, as costs have a significant long-term impact on the net return of the portfolio.