A ‘Sub-Broker’ is not a Trading Member of a Stock Exchange but acts on behalf of a Trading Member as an agent or otherwise for assisting investors in dealing in securities through such Trading Members. In India, anyone with the knowledge of the financial market and products can start a sub-broker business in India.
Presently, the sub-broker industry has immense scope in India, as a significant proportion of the Indian population is financially illiterate,and India is a largely untapped market with less than 3% of the billion plus population of India participating in the financial markets. Any person with a graduate degree, knowledge of financial markets and computers can register with the SEBI and obtain a Certificate of Registration to start a sub-broker business.
Anyone with a sub-broker marketing and excellent communication and interpersonal skills can help a large number of Indians to make money on the financial and stock market. As mentioned earlier, less than 3% of the Indian population participates in the financial market, which indicates a significant proportion of Indians are investing their savings elsewhere.
A sub-broker can help their clients to formulate various investment strategies. Some of them are listed below.
Purpose of Investment
A sub-broker business can help its client formulate an investment strategy by understanding the requirements and investment purpose of their client. Is the client investing for dividend income or capital gains? Based on this information, a sub-broker can design an investment strategy to enable their client to enjoy dividend income or capital gains, as per their desire.
Designing an investment strategy
A sub-broker business can help its customers to formulate and create an investment strategy which outperforms in the market during a period, protects their investments and returns and provides a balance to their financial planning. For example, during a bullish run, almost every stock showed gains, but a prudent sub-broker will ensure investing in stocks by providing maximum profits and returns.
Analyse Risk and Returns
A sub-broker business not only studies and analyses the financial market on behalf of their clients, but also design investment plans according to the needs, requirements, future goals, risk appetite of their clients. For example, A sub-broker can diversify investments in equity or debt funds if their client is conservative and has a low risk bearing appetite.
Regular studying and analysis of the Financial Market
Retail and small investors do not have complete knowledge of the stock and financial markets and often rely on tips, follow the herd policy wherein they invest in stocks where everyone is investing and do not regularly study and analyse the stock and financial market. A sub-broker business periodically examines and analyses the updates and changes in the financial markets and accordingly provides their clients with advice regarding investment, buying, selling and holding decisions.
Builds an Investment Discipline
Often retail investors, due to their lack of knowledge of the financial markets, make many decisions regarding buying and selling of stock on emotions and instinct. Often panic during market fluctuations indulges in panic selling where as sub-broker business stays calm in such volatility and try to take advantage of the market abnormalities to make money and gains for their clients.
Not everyone is a financial expert, but that does not mean that one should not take advantage of the financial wisdom of a sub-broker business to make wise, educated and well-informed investment decision.
With over 97% not participating in the financial markets and a vast majority of investors lacking knowledge of financial markets, sub-brokers can expand their sub-broker business to induct more people to participate in the financial market and help their clients reap benefits of investing using smart investing strategies.