Most, if not all financial services available to and specifically targeting the general public are indeed available directly as well, if you by-pass brokers and their associated brokerage fees and deal with the financial service provider directly. You can take it on good authority that brokers earn some tidy sums for the referrals they send the way of the primary financial services providers, which in itself only serves to add to the question of whether or not one really needs a broker.
You’d naturally assume that brokers are just convenient middlemen who earn their commission by brokering deals between financial services providers and customers. If you take a closer look at this convenience factor, it’s really convenience for the financial service provider (and perhaps the broker), is it not? I mean how does going through a broker really benefit you as the consumer if some financial service providers add the brokerage fees to the premiums they quote you? Is there therefore really a need for brokers?
If you walked into the offices of an insurance company, without an appointment at that, and asked to speak to a consultant about getting some coverage for whatever it is you wanted to insure, would they not offer you something to drink and roll out the red carpet for you instead of referring you to a broker? They would indeed, which brings us back to the question of whether or not you need a broker. Look, some instances call for the compulsory use of
Look, some instances call for the compulsory use of broker, like if you want to trade shares, CFDs, commodities or securities in general – you can’t just walk into the London Stock Exchange, hit the trading floors and start trading directly. You’ll have to make use of the services of a broker who earned their brokerage credentials by undergoing a rigorous qualification process. Even if you trade using an online platform, that deposit you make to fund your trading account is in actual fact paid to what is your broker, taking the form of your online trading platform service provider.
The Broker’s Role
The truth is however that brokers have a very important place in the relationship between you as the consumer and the financial services provider from whom you are buying a service, such as insurance or taking out credit, etc. In the specific case of buying insurance through a broker, the broker’s importance lies in their advanced knowledge of the typical consumer and their suitability to the appropriate corresponding financial service.
It goes beyond insurance however, but if we continue our focus on insurance, brokers typically earn their best commission from referring clients that go on to be very happy with the service they’re getting and perhaps more importantly, clients which pay their premiums faithfully as a result of the value they’re getting.
This means a broker (a good one) is only likely to pair you with a financial service or product which you could really do with and one which would really work well for you, otherwise their reputation with the financial service provider they’re providing clients to determines their future earnings ability. A broker also knows exactly what you need to declare in order to get the adequate coverage you need, something which could otherwise cause problems if you went it alone and say left out a security risk as part of your declarations, which would maybe cause a future claim to be denied.
So the answer is “yes,” you probably do need a broker, but you need a good one.