Do You Need a Stock Broker? Practical Guide

This guide answers “do you need a stock broker” for U.S. equities and related investing: you don’t necessarily need a human broker, but you typically need a brokerage or another mechanism to access...

2026-01-19 03:13:00

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Do You Need a Stock Broker?

do you need a stock broker is a common question for new investors. This article explains whether retail investors must use a broker or brokerage to buy and sell stocks, the difference between a human stockbroker and a brokerage firm, practical alternatives (robo-advisors, direct purchase plans, retirement plans), costs, safety checks, and step-by-step guidance to start trading.

Quick answer / Key takeaways

One-sentence summary: You do not necessarily need a human stockbroker, but you generally need a brokerage account or another authorized mechanism to access exchanges and trade stocks.
Highlights:
- Costs: Many online brokerages now offer $0 commissions for U.S. equity trades, but other fees still exist (spreads, options fees, margin interest, account fees).
- Control: Self-directed brokerage accounts give you direct control over orders; human brokers add advice and convenience at a higher cost.
- Alternatives: Robo-advisors, direct stock purchase plans (DSPPs), dividend reinvestment plans (DRIPs), and workplace retirement plans provide routes to equities without a dedicated human broker.
- Safety: Choose broker-dealers registered with regulators (SEC/FINRA), verify SIPC-like protections, and confirm custody arrangements.

Background: how stock trading works

Stock exchanges operate central matching and settlement systems that connect buyers and sellers. Retail investors cannot access exchange matching engines directly; orders must route through broker-dealers or authorized intermediaries that meet regulatory, technical, and membership requirements.

Broker-dealers provide access to exchange order books or internalize orders. They are subject to licensing, reporting, and capital requirements that protect market integrity. Settlement and custody rules (e.g., T+1/T+2 windows, clearinghouse processes) further require intermediaries to ensure trades finalize and assets are held in regulated custody.

Understanding this plumbing explains why, even if you don’t use a personal stockbroker, you will normally use a brokerage platform or another authorized mechanism to place and settle trades.

Terminology and roles

Stockbroker (human)

A licensed stockbroker is an individual authorized to execute trades on behalf of clients and often to give investment recommendations. Typical services include:

Trade execution for clients who prefer a human to place orders.
Personalized investment advice, portfolio reviews, financial planning, and sometimes estate or tax guidance.
Research interpretation and suitability assessments for complex securities.

Compensation models for human brokers commonly include commissions (per trade), fee-based arrangements, or fees tied to assets under management (AUM). Brokers must follow suitability rules and, depending on their registration, may owe different standards (suitability vs fiduciary duty).

Brokerage firm / online broker

A brokerage firm (broker-dealer) is a regulated company that executes trades and holds client assets. Within this category there are:

Discount/online brokers: Platforms that offer self-directed trading, low fees, and digital tools. They focus on execution and platform features rather than personalized advice.
Full-service brokerages: Firms that combine execution with advisory services, research, and planning.

Broker-dealers handle order routing, custody, compliance, and reporting. They may offer extra features such as margin lending, options trading, and banking-like services.

Robo-advisor and registered investment advisor (RIA)

Robo-advisors: Digital services that build and manage portfolios using algorithms and ETFs or stocks. They automate asset allocation, rebalancing, and tax-loss harvesting in many cases. Robo-advisors are useful for investors who want a hands-off approach with predictable fees.
Registered Investment Advisors (RIAs): Firms or individuals registered with regulators who often owe a fiduciary duty to clients. RIAs can offer personalized management and advice and are paid via fees, often based on AUM.

Do you need a broker to buy stocks?

Short answer: No, you do not need a human stockbroker, but yes, you usually need a broker-dealer or similar intermediary to access public markets.

Explanation:

Legal/operational reality: Exchanges require orders from members or through authorized intermediaries. Individuals cannot place orders directly on exchange infrastructure without a membership or an authorized intermediary.
Modern alternatives: Self-directed online brokerages let retail investors place orders directly through apps or web platforms without speaking to a human broker.
Exceptions: Some companies offer direct stock purchase plans (DSPPs) and DRIPs that let investors buy shares or reinvest dividends directly via the issuer or its transfer agent. Employer-sponsored plans and fund platforms also provide indirect exposure to equities without a retail brokerage account.

Therefore, while a human broker is optional, a regulated counterparty (broker-dealer, transfer agent, or plan administrator) is generally required to handle execution and custody.

Ways to buy stocks (with or without a human broker)

Online brokerage accounts (self-directed)

How they work:

Open an account with a broker-dealer, fund it via bank transfer, and place orders through a web or mobile platform.
Platforms provide order types (market, limit, stop), research tools, watchlists, and portfolio views.
Many online brokers offer fractional shares, extended-hours trading, margin, and access to options or bonds.

Why they’re popular:

Low cost: Many offer $0 commissions on U.S. stocks.
Control: You decide what to buy, when to buy, and how to trade.
Speed: Instant order entry and rapid settlement of trades.

Tip: When using an online broker, check execution quality, trade confirmations, and how uninvested cash is swept or invested.

Full-service broker / advisory relationship

When investors use them:

For complex needs (tax planning, estate planning, concentrated positions, business owners).
For investors who prefer a human to interpret markets and implement strategies.

Services provided:

Tailored investment advice, discretionary management, and multidisciplinary planning.
Access to research, structured products, and sometimes IPO allocations.

Tradeoffs: Higher fees, potential conflicts of interest, but value for those needing bespoke services.

Robo-advisors / managed accounts

Robo-advisors construct portfolios using model allocations (often ETFs) and manage rebalancing automatically. They’re best when you want low-cost, automated diversification and rebalancing without daily decision-making.

Considerations:

Lower fees than many full-service advisors.
Limited customization unless higher-tier managed options are offered.

Direct stock purchase plans (DSPPs) and dividend reinvestment plans (DRIPs)

DSPPs and DRIPs allow investors to buy shares directly from an issuer or its transfer agent, or to reinvest dividends to purchase more shares automatically.

Pros:

Bypass some brokerage fees.
Can be convenient for long-term, buy-and-hold strategies.

Cons:

Not all companies offer DSPPs/DRIPs.
Limited order types, sometimes limited liquidity and transfer friction.

Retirement plans and employer-sponsored accounts

401(k), 403(b), and many company-sponsored plans provide access to stock exposure via mutual funds, target-date funds, and sometimes brokerage windows.

Benefits:

Tax-advantaged accounts that facilitate long-term investing without a retail brokerage.
Employer matching and automated contributions encourage saving.

Investment funds (ETFs, mutual funds)

ETFs and mutual funds let you own a diversified basket of stocks. You can buy funds through brokerages, through fund companies, or via some bank platforms.

Notes:

ETFs trade like stocks and usually require a brokerage interface to trade intraday.
Mutual funds may be bought directly from fund families in many cases.

How stock trading differs from cryptocurrency trading

Key contrasts:

Access and intermediaries: For stocks, trades normally pass through broker-dealers that connect to regulated exchanges; for cryptocurrencies, trading often occurs on centralized crypto exchanges or decentralized protocols. However, regulated wrappers (like ETFs) and institutional plumbing increasingly route crypto exposure through traditional financial intermediaries.
Custody: Stocks are held in brokerage custody with established settlement processes and protections (e.g., SIPC in the U.S.). Crypto custody may be with exchanges, custodial wallets, or self-custody wallets. If mentioning wallets, Bitget Wallet is recommended for users seeking integrated custody options.
Regulation and market hours: Stock exchanges have defined trading hours and established clearing/settlement cycles. Cryptocurrency markets trade 24/7 on many venues, although regulated instruments (e.g., ETFs) have trading hours.
Recent institutional flows (context): As of Jan. 16, 2026, according to CryptoSlate, institutional flows and regulated wrappers like U.S. spot ETFs have come to play a dominant role in price discovery for Bitcoin, with notable ETF flows recorded on Jan. 9, Jan. 13, and Jan. 14, 2026. This trend shows how access and liquidity for some crypto exposure are increasingly mediated through traditional market infrastructure and brokerages rather than solely through crypto-native venues. (Source: CryptoSlate; data points include U.S. spot Bitcoin ETF net flows reported for those dates.)

This evolving interaction means that while crypto trading can be accessed without a traditional broker, parts of institutional crypto market structure are nonetheless intertwined with broker-dealer ecosystems.

Costs and how brokers make money

Common cost types:

Commissions: Many U.S. equity trades now carry $0 commissions at online brokers, but commissions may still apply for options contracts, OTC securities, or international trades.
Spreads: The difference between the bid and ask price. When trading through some platforms or market makers, spreads can be a hidden cost.
Account fees: Maintenance fees, inactivity fees, or platform subscription fees may apply at some brokers.
Margin interest: Borrowing to trade costs interest charged on the margin balance.
Payment for order flow (PFOF): Some brokers route orders to market makers in exchange for a fee; this can reduce explicit commissions but raises questions about execution quality and conflicts.
Interest on uninvested cash: Brokers may earn interest on client cash balances or sweep them into partner accounts.
Other service fees: Wire fees, paper statement fees, transfer fees, and mutual fund or ETF expense ratios.

Tradeoffs: A zero-commission trade can still produce costs through spreads, order routing practices, or account fees. Evaluate total cost, not just the headline per-trade price.

Pros and cons of using a human broker vs. self-directed brokerage

Using a human/full-service broker — Pros:

Personalized advice and planning for complex financial situations.
Discretionary management options and coordinated multi-asset solutions.
Access to certain products and institutional services.

Using a human/full-service broker — Cons:

Higher fees and potential commission structures.
Potential conflicts of interest if compensation depends on product sales.
Less control for investors who prefer to trade themselves.

Self-directed online brokers and robo-advisors — Pros:

Lower cost and greater control.
Fast, transparent pricing and easy account management.
Educational tools and research for learning investors.

Self-directed online brokers and robo-advisors — Cons:

You bear responsibility for decisions and must manage risks.
Limited personalized advice unless you pay for advisory add-ons.
Potential for information overload for new investors.

How to choose a brokerage or broker

Key factors to evaluate

Fees and commission structure: Look beyond $0 trade claims to understand options fees, margin rates, and account charges.
Account minimums: Some brokers have no minimums; others require a balance to access certain services.
Available securities: Confirm the platform offers stocks, ETFs, options, fractional shares, or international securities if needed.
Platform/usability: Mobile app strength, order entry experience, and reliability matter for active traders.
Research and education: Do you need analyst reports, screeners, and learning modules?
Customer service and support: Phone, chat, and email help can be crucial during issues.
Regulatory registration and protections: Verify registration with SEC and FINRA and confirm SIPC or equivalent protections.
Order execution quality: Ask for statistics on execution speed, price improvement, and order routing practices.
Custody and security: How are assets held? Are there segregated accounts and industry-standard security practices (2FA, cold storage for crypto custody)?

Special considerations for active traders, options traders, or investors needing advice

Execution speed and low-latency access.
Advanced tools: Level II quotes, direct market access, and algorithmic order types.
Margin rates and leverage limits.
Fiduciary status if you require formal advice; prefer RIAs or fiduciary-registered advisors for planning.

Practical steps to start trading stocks (beginner checklist)

Decide your goals: Short-term trading, long-term investing, retirement saving, income, or capital appreciation.
Choose an account type: Taxable (individual/ joint), retirement (IRA, Roth IRA), or custodial accounts for minors.
Compare brokers: Fees, assets offered, tools, service, and regulatory protections.
Open an account: Provide ID, tax information (W-9/W-8), and beneficiary details for IRAs.
Fund the account: ACH transfer, wire, or check; understand settlement timing before trading.
Learn basic order types: Market orders (immediate), limit orders (price control), stop orders (risk control).
Check margin and leverage rules: Use margin cautiously and understand maintenance requirements.
Diversify: Avoid concentration risk; use funds or a diversified basket for beginners.
Recordkeeping: Keep trade confirmations and records for taxes (1099s in the U.S.).
Monitor and review: Rebalance periodically and reassess goals.

Alternatives to a brokerage relationship for stock exposure

Pooled funds: Mutual funds and ETFs give diversified exposure; some mutual funds can be bought directly from fund families.
Target-date funds: Automatically rebalance asset mix based on a retirement horizon.
Workplace retirement plans: 401(k)s and similar plans often include fund lineups for stock exposure.
Non-broker custodians: Some banks or trust companies act as custodians for accounts and can execute fund purchases without a retail broker interface.
DRIPs and DSPPs: Buy directly from issuers when available.

Each alternative has tradeoffs in cost, convenience, and liquidity.

Regulatory and safety considerations

Broker registration: In the U.S., broker-dealers register with the SEC and are subject to FINRA rules. Confirm the broker’s CRD/registration status when possible.
SIPC protection: Many U.S. brokerage accounts are covered by SIPC for missing assets due to broker failure (not protection against market losses). Confirm coverage limits and whether additional private coverage is provided.
Custody rules: Ensure client assets are held separately from the firm’s assets and that the broker publishes audited financials and customer protection policies.
Dispute resolution: Understand arbitration clauses and complaint processes.
Fraud awareness: Beware of unsolicited investment offers, pump-and-dump schemes, and phishing attempts. Legitimate brokers will never request password or private keys via unsecured channels.

Frequently asked questions

Q: Can I buy a stock directly from the company?

A: Sometimes. Some companies offer direct stock purchase plans (DSPPs) or DRIPs. Availability varies by issuer and may require working with the company’s transfer agent.

Q: Do I need a broker to buy fractional shares?

A: Fractional shares are typically offered by brokerages and platforms that support fractional ownership. If you want fractional exposure, check whether the broker supports it.

Q: Are brokers required for international stocks?

A: Buying non-U.S. stocks often requires a broker with access to international markets or ADRs (American Depositary Receipts). Some online brokers provide international trading or access via partner networks.

Q: How does margin change requirements?

A: Trading on margin introduces borrowing costs and maintenance requirements. Margin amplifies gains and losses and may require additional cash if equity falls below maintenance levels.

Q: Can I trade stocks without fees?

A: Many brokerages offer $0 commission trades on U.S. stocks, but other fees (spreads, options fees, account services) can apply. Always review the broker’s full fee schedule.

Practical final notes and next steps

If you are asking “do you need a stock broker” because you want to start investing today, practical next steps are:

Decide whether you want active control (self-directed brokerage) or a managed solution (robo-advisor or advisory service).
Compare brokers on fees, available assets, and regulatory protections.
If you plan to hold both stocks and crypto, consider a platform ecosystem that supports both custody and trading; for users seeking integrated services, Bitget provides exchange access and Bitget Wallet for custody and cross-asset management.

Explore Bitget’s account options and Bitget Wallet to see how modern brokerage-style platforms combine low-cost trading with integrated custody for both traditional and digital assets.

Thank you for reading. For more detailed walkthroughs (opening an account, order types, or a comparison table of broker features), explore the related topics above or contact a registered financial professional for personalized guidance.

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