Brokers are intermediaries who arrange transactions without taking title or assuming market risk; dealers differ by taking inventory risk. They operate in many sectors and are paid by commission, fee, or both. Modern advice: verify licensing and disciplinary history (e.g., FINRA BrokerCheck or state license lookup), clarify compensation and services in writing, compare human and digital brokerage options, and check references.
What a broker is
A broker is an intermediary who brings buyers and sellers together and helps negotiate transactions. Traditional brokers do not take title to goods or assume ongoing market risk; they arrange the deal and earn a fee or commission when it closes. In many marketplaces, however, the line between broker and dealer (or principal) matters: dealers may buy and resell inventory, while brokers arrange transactions on behalf of clients.
Where brokers work
Brokers operate across sectors: real estate, securities, insurance, freight and shipping, art and collectibles, and commercial trade. Digital platforms have expanded brokerage models - online brokerages and marketplaces connect users directly, offer self-directed services, or pair human advisors with automated tools (robo-advisors).
Compensation and duties
Brokers are commonly paid by commission when a sale or trade completes. Some charge flat fees, retainers, or a hybrid fee structure. Legal and ethical duties vary by sector. For example, registered broker-dealers and investment brokers in the U.S. are subject to SEC and FINRA rules, including Regulation Best Interest for recommendations. Real estate brokers must be licensed at the state level and often owe specified duties to clients; some advisors (registered investment advisers) owe a fiduciary duty by law, which differs from broker standards.
What brokers typically do for you
They identify counterparties, market listings, negotiate terms, and help with documentation and closing logistics. Experienced brokers add value by knowing local markets, routing goods or offers efficiently, and advising on pricing and timing.
How to choose a broker (practical checklist)
- Verify licensing and regulatory history. For securities brokers use FINRA BrokerCheck; for real estate, use your state's licensing lookup; insurance regulators list agents by state.
- Ask how they are paid. Understand commissions, fees, and any third-party payments or conflicts of interest.
- Confirm the scope of services. Will they handle paperwork, settlement logistics, inspections, or post-sale issues?
- Check references and reviews. Ask for recent client examples and check public disciplinary records where available.
- Insist on a written agreement that outlines responsibilities, timelines, and fees.
- Consider digital alternatives. If you want lower cost and more control, compare online brokerages and robo-advisors, noting differences in service and protections.
Final note
A broker can simplify complex transactions, but the quality of that help depends on licensing, transparency about fees, and documented responsibilities. Do due diligence before you hire one.