Types of stockbroker: which one do you need?
Compare types of stockbroker, costs and service levels before choosing an execution-only, advisory or discretionary account.
The types of stockbroker you choose will shape your costs, control, and responsibility. The right choice is not the fanciest service. It is the one that matches how much help you actually need.
The Short Version
The main types of stockbroker are execution-only, advisory, and discretionary. They all help you access markets, but they do very different jobs.
- Execution-only brokers place trades that you choose yourself. They are usually the cheapest option.
- Advisory brokers recommend investments, but you still approve each decision.
- Discretionary managers run the portfolio for you within agreed limits.
- Most new UK investors should understand the costs before paying for advice or management.
How types of stockbroker differ
The three main types of stockbroker differ by control. Execution-only gives you the most control and the least help. Advisory gives you guidance, but the final decision stays with you.
Discretionary management goes further. You agree the rules, risk level, and broad aims. The manager then buys and sells without asking you each time.
This is why the label matters. A cheap broker is not bad because it gives no advice. An expensive broker is not good because it sounds personal. The service has to match the job.
Execution-only brokers
For most private investors, types of stockbroker starts with execution-only platforms. These firms carry out your orders. You choose the shares, funds, trusts, or exchange traded funds.
This model is common because it is simple and usually cheap. You log in, place the trade, and pay the platform charge or dealing fee. The broker is not checking whether the idea is sensible.
That freedom is useful if you are comfortable doing your own research. It also means mistakes are yours. If you buy the wrong thing, the platform will not rescue you from the decision.
Before using any firm, check it on the FCA Register. Our guide to making sure your broker is FCA authorised explains the practical steps.
Advisory brokers
Advisory services sit in the middle of the types of stockbroker range. The broker gives recommendations, but you decide whether to act. That can feel reassuring if you want a second view.
The important point is responsibility. Advice should fit your goals and risk tolerance, but you still approve the trade. You are not handing over full control.
This can suit people with larger portfolios, limited time, or a specific income need. It can also be costly. Higher fees only make sense if the advice is useful enough to justify them.
Ask how the broker is paid before you start. The answer should be plain, written down, and easy to compare. If you cannot explain the fee after reading it, pause.
Discretionary managers
Discretionary management is the most hands-off of the types of stockbroker. You agree the mandate, then the manager runs the portfolio day to day.
A mandate is the set of rules for the account. It may cover risk level, income needs, ethical limits, tax wrappers, and the kind of assets allowed. The manager works inside those boundaries.
This service is aimed at people who want delegation, not a cheaper trading app. Fees are usually based on assets managed. On a large portfolio, even one percentage point can be a serious annual cost.
Protection also has limits. The FSCS investments page explains what compensation can cover when a regulated firm fails. It does not protect you from normal market losses.
Where robo-advisers fit
Robo-advisers blur the types of stockbroker because they automate portfolio management. You answer questions, choose a risk level, and the service places you into a managed fund portfolio.
They are not traditional stockbrokers. They usually do not let you choose individual shares. Their value is convenience, diversification, and lower minimum balances than old wealth managers.
That can work well for someone who wants a managed route but does not need a personal broker. It may not suit someone who wants control over each holding.
The trade-off is personalisation. A robo-adviser may be tidy and low cost, but it will usually follow a model portfolio. That may be enough, but it is not bespoke advice.
Costs, control and responsibility
The types of stockbroker decision is really a trade-off between price and responsibility. The more help you want, the more you usually pay. The more control you want, the more work you do yourself.
Execution-only is cheap because you carry the decision risk. Advisory costs more because someone is giving recommendations. Discretionary costs more again because someone is managing the account.
This is also where platform structure matters. Nominee accounts are common in modern investing platforms. If that term is unclear, read our guide to who owns your shares on an investment platform.
Think in pounds, not only percentages. A fee that sounds small can become large as your account grows. The service has to earn that cost each year.
A Worked Example
Imagine a UK investor with GBP 8,000 in a Stocks and Shares ISA. They want broad funds, can read basic fund factsheets, and do not trade often. Execution-only is probably enough.
Now imagine someone with GBP 180,000, a pension, an ISA, and a need for income. They may still use execution-only, but advice could be worth considering if tax and risk choices feel complex.
Finally, imagine someone with a large portfolio who does not want to manage it. Discretionary management may fit, but only if the fee is clear and the mandate is understood.
These examples are not recommendations. They show how the types of stockbroker question changes when the amount, time, and confidence level change.
What This Means For You
Use types of stockbroker as a checklist before opening an account. Ask how much control you want, how much help you need, and what the yearly cost will be in pounds.
Do not choose advisory or discretionary service just because it sounds safer. Paying more does not remove market risk. It only changes who helps with the decisions.
Also check service before price. A platform can be cheap and still awkward for your needs. Look at account wrappers, dealing options, customer support, research tools, and how easy it is to transfer away later. Do this carefully before funding the account.
If you are new, start by understanding execution-only. Then move up the service ladder only if you can explain what extra help you are buying.
In Plain English
Types of stockbroker means three levels of help. Execution-only does what you ask. Advisory suggests what you might do. Discretionary does the day-to-day investing for you.
The cheapest option gives the most control. The most expensive option gives the most delegation. The best option is the one where the cost, control, and responsibility all make sense.
This article is for general financial education only. It is not financial advice or personal investment advice. Investments can fall as well as rise, and you may get back less than you invest.