Becoming a sub-broker is one of the best business decisions at any stage of your life. If you have extensive knowledge about the financial market or are keen on working in the financial market, then choosing a career as a sub-broker is the right decision. You can take a sub-broker franchise to start your own business.
Who is a Sub-Broker?
A sub-broker is a person who is not directly a member of the stock exchange but acts on behalf of the trading member. He/she is a mediator assisting investors to deal with shares and securities on behalf of the member.
As a sub-broker works on behalf of the broker, he/she earns commission from the stockbroker. The sub-broker charges depend on the base of clients and the brokerage partner.
What is a Sub-Broker Franchise Business?
A sub-broker franchise falls under the franchise business model, where you open a broking franchise under the name of a reputed brokerage firm.
The first step to opening a franchise is to register itself under SEBI. It is then the responsibility of the sub-broker to acquire new clients from the market and earn revenue in the form of brokerage commissions from the stockbroker.
Having an excellent client base is the key to revenue generation in a sub-broker franchise business model.
A sub-broker is responsible for the service given to a client and check that the client’s portfolio must bear profit. Also, there are norms laid by the stockbroker during the agreement which has to be followed. The business needs complete vigilance and proactiveness.
Also, there is a percentage share of the income that has to be paid as a rent token to the franchiser, for using the patent name of the broker. The amount is usually a bare minimum, while all the other income is retained by the franchise.
The commission of a sub-broker depends on the pricing model of the broker. The brokerage could have;
Percentage-based model: In this model, sub-brokers can charge a percentage from the brokerage charged by a stockbroker. So, if there are more client transactions, there will be more income for the stockbroker in the form of brokerage charges. The stockbroker then provides commission from the brokerage charges received on the transaction.
Fixed-fees model: In this model, there is a set fee for specific transactions for the sub-brokers. Only the set amount of fees is provided to the sub-broker from the transactions.
Combination model: In this model, the sub-brokers income is a combination of the percentage-based model and fixed fees on transactions. Some sub-brokers can even receive 60% of the stock-brokerage fees in this model.
If you choose the right stockbroker in the market, then you can earn lucrative benefits and a high income. So when you start a sub-broker franchise make sure the broker provides you with the best rate in the market.
Being a sub-broker is a responsible job. You can earn only if you can provide excellent service to the clients. Also, you might need to set apart an initial investment for finding an office space and hiring staff to provide a seamless experience to the clients.