SHARETIPSINFO >> Articles Directory >>Commission – Way stock market broker works


You can get a middle man done things for you when you are getting a loan or a share. Often these middle men are called brokers and will make things done faster and easier for you. They charge a fixed percentage of the total money as a commission for the work they are doing. The commission rate might vary according to the person and the type of dealings done.

Often the brokers will take 100% of the broker cash with them. But this commission won’t be enough. It will be better if the client can refer the broker to someone else and thus bring more number of clients for the users. There can be commission spilt happening in every deal and the broker will lose cash. Then the brokers can charge more commission from the clients. The clients can get a better service from the brokers through their extra experience and knowledge level. But this can cause other problems as the client will not be beneficial in paying such a huge amount as the commission cash.

There are no fixed standards set by the industries to perform the commission split. Yet there is a term usually heard here as the commission split as per the industry standard. The split can be 25%, 30%, 50% and there can be splits more than that. The commission split can occur with a lender, broker or any intermediate agent. Thus what happens in the end is that the commission split will charge the broker more from his pocket which in turn will demand the client more.

If there are no commission splits happening, the broker need to charge a less amount. This can make the client happy. The satisfied client will refer the broker to more number of clients. The result is a higher business for the broker resulting from a lower commission. Commission split can make the broker loss his money and someone else who hasn’t done anything to earn more. The only thing that can be done is to avoid the cases where commission split has to be done. Then the broker need not charge more from his client.  

Paying a high commission can often cause the client to think of going without a broker. They never want a greater proportion of the total deal to be spent for a middle men work. But at the same time, a reasonable commission rate can help them to get things done in a more professional manner for them and this will help things to be done faster and simpler.  Helping the brokers with more number of referrals is another suggestion that can be taken over by people to reduce the commission rate being charged by a broker.

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