Securities firms provide financial advice.
A securities corporation is a company that provides financial services related to securities such as stocks, bonds, futures and options. Securities companies, sometimes called brokerage firms or firms, are authorized to mediate the purchase and sale of securities. They typically offer a wide range of products and services for which they charge a fee or receive a commission.
Some securities companies offer limited real estate partnerships.
While a client can contact a brokerage firm and communicate their investment choices, most firms offer personal services that include a wide range of financial planning. Some companies specialize in certain areas, while others may offer a wide range of options. Financial planning includes areas such as cash flow management, investment planning, risk management, insurance planning, tax planning and retirement planning. These services are performed through the products that a securities brokerage firm offers its clients.
Investments are the most common products offered by a stockbroker. Investments can include buying and selling simple securities such as stocks and bonds, or more diversified investments such as mutual funds, hedge funds and venture capital funds. In many cases, securities companies will participate in institutional trading, which occurs when they buy and sell securities in large blocks for their clients or the large blocks are part of funds managed by the company.
Risk management services offered by securities firms offer clients the opportunity to transfer financial risk to other entities. Corporations assess risk through market research that provides a cost-benefit analysis that allows a business or individual to make an informed decision about their investments. Extremely wealthy clients may be able to take on more risk than those who are investing on a significantly smaller scale.
Some securities companies also offer real estate limited partnerships (RELP) or real estate investment trusts (REIT). These investment options involve a group of investors who develop and build real estate to generate income. They are often popular with extremely wealthy clients because they offer high growth potential, income and tax protection.
Tax planning is another area of financial planning where some securities firms offer advice. The strict laws governing taxes and securities in most countries require securities companies to be knowledgeable in this area so that investors can protect their cash and non-monetary assets. Tax planning experts advise clients on how to legally avoid taxes.
Another common service offered by some stockbrokers is retirement planning. Companies offer products such as 401(k) plans, profit sharing plans, simplified employee pension plans (SEP) and individual retirement accounts (IRA) to their businesses and individual customers. Securities companies may also offer insurance investment opportunities, such as life insurance and annuities.