Major Types of Brokerage Companies

A brokerage company, also called a brokerage firm or brokerage, functions as an intermediary between buyers and sellers to help them complete a transaction. Brokerages exist to mitigate the imperfect market, in which information is not always available or equally distributed for all.

Brokerages connect their clients and help them find their most suitable match at the best possible price for each side while earning a commission or fee. Either the exchange or the customer or occasionally both pay them upon the successful completion of the transaction. Depending on the range and cost of services and who provides them (a person or a computer), brokerage firms fall under one of the three major types: full-service, discount, and robo-advisors.

A full-service brokerage company or traditional brokerage is the most expensive type. They provide multiple products and services ranging from money management and estate planning to tax advice and financial consultation. In addition, they also offer current stock quotes and perform economic conditions research and market analysis. Some traditional brokerages operate discount brokerages and robo-advisor platforms too.

Full-service brokerages employ professional brokers and financial advisors with proven track and credentials. They are in charge of all investment decisions and continuously advise and support their clients, with whom they may build personal relationships.

Traditional brokerage firms’ clients may have to pay a fee, commission, or both. The charging can be per trade, but many advisors shift to a wrap-fee business model and charge one annual fee for all their services. Usually, the fee amounts to one percent to two percent of the total market value of the managed investment or the so-called assets under management (AUM). Alternatively, many full-service brokers require a minimum account balance of six or more figures for providing their services.

Discount brokerages charge lower fees than their traditional counterparts but may not offer a broad range of products and services and a personalized approach. Often, the size of an investor’s account determines the comprehensiveness and quality of provided advice.

The first discount brokerage companies emerged in the 1970s and 1980s. A decade later, the rise of online trading and the consequent severe competition significantly decreased the commissions of discount brokers compared to their full-service colleagues. It also took the discount brokerages out of their physical offices and off to the virtual space.

The majority of today’s discount brokerage firms are online platforms or smartphone apps that enable self-directed investors to decide on their trading for a small commission. In 2019, some discount brokerages launched an initiative to charge no commission on all equity trades, which urged many others to adjust their fees accordingly.

The 2010s marked the appearance of robo-advisors - automated online investment advisory platforms. Governed by algorithms, these digital-only brokerages operate at a minimal cost with little to no human intervention. Quite often, robo-advisors waive all commissions or fees, and the required initial investment can be just a few dollars.

Most robo-advisors offer subscriptions to long-term passive index strategies that observe the modern portfolio theory (MPT). The MPT entails choosing investments to maximize their total returns at an acceptable risk level. Some current robo-advisors allow their clients to slightly alter their investment strategy if they prefer more active management.

Furthermore, several robo-advisors have also employed human advisors that clients can consult with against a higher fee. Usually, it ranges between 0.25 percent to 0.50 percent of the annual AUM, which is still much lower than full-service brokerage fees. However, human advisors often cannot divert the portfolio allocation generated by the brokerage algorithms.

The History of Wimbledon - Most Notable

The world's oldest annual tennis tournament, Wimbledon was first held by the All England Croquet and Lawn Tennis Club in July 1877. Twenty-one players competed in the inaugural Gentlemen's Singles tournament, and Spencer Gore became the first-ever Wimbledon champion. Wimbledon remained a men's-only tournament until 1884, when Maud Watson became the first Lady's Singles champion. Wimbledon was strictly an amateur tournament until 1968, when it began allowing professionals to play.

In addition to ranking as the oldest tennis tournament in the world, Wimbledon is the only Grand Slam played on grass. It also stands out from other tennis tournaments in that it requires players to dress almost entirely in white clothing. Umpires can even enforce this rule. One umpire, in 2013, made defending champion Roger Federer change his shoes because the soles were orange.

Federer, who is tied with Novak Djokovic and Rafael Nadal for the all-time lead in Grand Slam victories, has won Wimbledon more than any other male player in the sport's history. He recorded his first of eight Wimbledon championships in 2003 with a straight set victory over Australia's Mark Philippoussis in the final. That marked the first of five consecutive titles at Wimbledon for Federer, who defeated American Andy Roddick in the 2004 and 2005 finals and Nadal in the 2006 and 2007 finals. He won again in 2009, 2012, and 2017, and was runner-up in 2008, 2014, 2015, and 2019.

Four other men have won Wimbledon at least five times. Pete Sampras and William Renshaw have each won the tournament seven times, while Djokovic and Bjorn Borg have won six and five times, respectively. Renshaw, one of the earliest stars at Wimbledon, won the tournament in six consecutive years from 1881 to 1886 and again in 1889. Sampras won Wimbledon in seven of eight years from 1993 to 2000, while Borg won in five straight years from 1976 to 1980.

Despite the sustained success of the aforementioned male players, no other tennis player has won at Wimbledon more than Martina Navratilova. The native of Czechoslovakia won her first Wimbledon championship in 1978 by defeating Chris Evert in the final; she won in seven of the next nine years and defeated Evert again in four of those finals. Navratilova won her ninth and final Wimbledon championship in 1990. Meanwhile, Steffi Graf and Serena Williams have each won Wimbledon seven times.

Wimbledon has featured some of the most memorable and iconic tennis matches of all time, including the 2008 and 1980 finals. Nadal defeated Federer in the former to end the Swiss star's run of five consecutive Wimbledon championships. The match constituted a battle between two dominant players, as combined, Nadal and Federer had won 14 of the prior 16 Grand Slam titles. Federer came back from a 5-2 deficit in the fourth set, while Nadal saved 12 of 13 break points to win the decisive fifth set.

The men's final at Wimbledon in 1980 was equally memorable. Borg, who had won the prior four championships at the All England Club, defeated American John McEnroe. The back-and-forth battle saw McEnroe dominate in the first set before dropping the subsequent two sets, then overcoming a pair of championship points in the fourth set before winning a 34-point tiebreaker.