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Choosing Your Financial Guide: Remisiers vs. Authorised Persons

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09 Aug 20246 mins readBy MOFSL

Introduction

Remisier and authorised persons are vital players in the Indian stock market. While they are fundamentally the same, their operations differ. Though they act as intermediaries between you, the investor, and stock brokers, they have different business models. As an investor, you need to understand the differences between both to understand who among them offers a better deal.

Who is a remisier?

A remisier is a freelance agent who acts as an intermediary between you and the stockbroking firm. Remisiers earn a commission for each trade executed, work independently, and may have affiliations with multiple broking firms. Their primary job is to get new clients for a broking firm.

Who is an authorised person?

An authorised person works under the banner of a brokerage firm and carries out transactions on their behalf. They offer trading services to institutional investors and corporate houses. They earn a higher commission than remisiers, and their business model resembles a franchise. Unlike remisiers, authorised persons must have office spaces and higher entry-level costs.

Remisier or authorised person: Who gives you a better deal?

To determine who gives you a better deal, you need to understand the advantages and disadvantages of a remisier and authorised person. Knowing them will help you choose based on your preferences and goals.

Advantages of a remisier

  • More flexibility

As independent agents, remisiers offer flexibility in their services and commission rates. They can customise their offerings to suit your specific needs and preferences and provide a level of customisation that larger authorised persons may struggle to match. 

  • Direct communication

When you opt for a remisier, you have direct contact points for your trading requirements. This facilitates seamless communication and allows swift information exchanges for prompt query resolutions. 

You can convey your investment preferences and objectives directly to a remisier, fostering a personalised approach to trading. 

Disadvantages of a remisier

  • Limited resources

Remisiers, operating independently, often lack the extensive research capabilities and resources that larger brokerage firms possess. As a result, you might not receive the same level of in-depth market analysis or tailored investment recommendations. This may limit access to comprehensive market insights and research tools for informed decision-making in complex financial landscapes.

  • Potential bias

Since remisiers earn commissions on trades, they may prioritise generating fees over your best interests. This can lead to a conflict of interest. In such scenarios, ensuring transparency and trust in your dealings with a remisier becomes essential. 

You can mitigate the risk of undue influence by actively engaging in open communication and clarifying your expectations regarding investment strategies and fees.

Advantages of an authorised person

  • Access to vast pool of resources

Thanks to their affiliated brokerage firms, authorised persons have access to research, market analysis, and a variety of investment products, which grants them a broader range of investment opportunities and insights. 

This comprehensive access enables them to offer you tailored investment strategies based on thorough market analysis and a deep understanding of various financial products.

  • Regulatory oversight

Authorised persons function within a regulated framework. This provides you with an added layer of protection and confidence in your investment endeavors. 

Regulatory oversight actively ensures compliance and ethical conduct. With them, you can rely on the assurance that your investments are being managed within established guidelines, minimising the risk of fraudulent activities and unethical practices. 

Disadvantages of an authorised person

  • Less personalised service

Authorised persons may find themselves catering to a broader client base, which can constrain the extent of individualised service they can offer. This broader clientele spectrum makes a more generalised approach to client interactions necessary. 

While authorised persons still strive to deliver quality service, the sheer volume of clients they handle may impact the depth of attention each individual receives.

  • Potential conflict of interest

While regulatory oversight can bring down risks, authorised persons may still face conflicts of interest. The chances increase, if they receive incentives for promoting specific investment products or services offered by their brokerage firms.

Summing it up

When deciding between a remisier and an authorised person, it's crucial to consider your preferences, investment choices, and the level of service you require. Each option has unique benefits, and choosing the one that best suits your needs is important.

If you want personalised attention and flexibility, a remisier is better. However, an authorised person should be your go-to option if you value access to resources, regulatory oversight, and specialised expertise.


 

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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