What Is a Deposit Broker?

A deposit broker is a type of financial broker that will take money from clients and put it with insured financial institutions. This type of broker seeks to provide an alternative to a traditional stockbroker that allows you only to put money into stocks.

With a deposit broker, you can put your money into a variety of fixed income investments. For example, you might decide to purchase a certificate of deposit or a guaranteed investment certificate from the deposit broker instead of stock.

Investors that utilize deposit brokers traditionally value safety over pure capital appreciation. The investments of deposit brokers are typically very low risk securities, and they seek to provide regular returns to investors.

The requirements to become a deposit broker are not as stringent as those to become a stockbroker. Deposit brokers do not necessarily need approval from the SEC (Securities and Exchange Commission) in order to sell these types of securities. 

The deposit brokers will be compensated by charging a small commission on the transactions that they process for their clients. This commission will generally be smaller than what you would pay with a stock purchase because the profits are smaller and the opportunities for financial gain are lower.

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