A broker is the intermediary between you and the financial markets and allows you to invest in ETFs, stocks, and other financial instruments. Choosing a broker is among the first steps when starting to invest. We explain why you may need a broker, how they work and how they make money.

Brokers allow you to buy and sell ETFs, stocks and bonds

Financial assets like ETFs, stocks and bonds are traded on exchanges. The exchange is the place where buyers meet sellers. Known exchanges are XETRA (Germany), London Stock Exchange or the New York Stock Exchange. But when you want to buy a stock or an ETF, you can't just show up at the exchange. Instead, exchanges only work with companies that have the necessary license: brokers. By opening an account with a broker, you get access to the financial markets and invest.

On top of, some brokers offer additional services like analyses of stocks. These are usually targeted at more experienced traders.

Do I need a broker to invest?

A broker is required only if you want to manage your own portfolio of investments. This is a great solution if you've taken the time to learn and understand the intricacies of investing, if you know what mix of ETFs or stocks are right for you and aligned to your goals, and when you've understood the tax implications of each type of investment.

But you don't always need a broker. There are apps, like Curvo, that let you invest in a sensible portfolio of ETFs without having to worry about the complexities of investing through a broker.

Note that your bank may offer brokerage services as well. However, they are often a lot more expensive than dedicated broker companies (we've been burnt by this ourselves in the past). So avoid buying stocks and ETFs through your bank!

How does a broker make money?

Traditionally, brokers primarily make money from transaction fees. They charge a fee for each transaction (both for buying and selling) that they execute for you. The fee is typically a percentage of the transaction, with a minimum fixed amount.

With the rise of commission-free (or almost) brokers like DEGIRO, Trade Republic or Trading 212, we're seeing different business models come up. For instance, some started earning money through securities lending. By lending your stocks and ETFs to other investors, the broker earns an interest. It shares part of it with you, but keeps the rest. Others earn money through currency conversion, or on margin interest if you start trading on margin (meaning investing with borrowed money).

Payment for order flow (PFOF) is another revenue model, popularised by Robinhood in the US and Trade Republic in Europe. These brokers earn a fee by directing your orders to certain parties, called market makers, with which they have an agreement. PFOF is controversial because it can harm the investor. Because of this, it's banned across the European Union from 2026 onwards.

Which broker is right for me?

There are so many brokers you can choose from. They differ on:

  • Their fees, as some are cheaper than others. Some also lend your assets out or charge a subscription fee to use their service.
  • How they handle taxes. In general, domestic brokers take care of declaring  and paying all taxes you owe. Foreign brokers tend to shift the responsibility (and fiscal risk!) to you.
  • The ease of setting up an account. Some provide streamlined apps, whereas others only offer a clunky web application.
  • Safety. Some brokers have had issues with the regulators.

🇧🇪 For Belgians, we suggest you read our guide to help you choose the best broker for you.


We hope this helped you to understand what brokers are, how they act as the intermediate between you and the stock market, facilitating the purchase and sale of stocks, ETFs, bonds, and others. We showed you how brokers offer services such as market order execution, investment analysis, and managed investment services, primarily making money through commissions, spreads, and other fees.