Remisier vs Sub broker is one of the most sought after comparisons potential business partners look for. The terms, remisier and sub-broker are often used interchangeably and more often confused with one another. The essential idea behind the terms, however, is the same.
In both cases, there is intermediary acting between the investor and a stockbroker. Further, both of these two jobs have more or less the same earning model (percentages may differ). Despite these similarities, the two terms should not be related to each other as there are some fine differences between them.
So, let’s try and understand what those are, and to do that, we need to know what the term remisier actually means:
Remisier vs Sub broker – Basics
Let’s take baby steps towards understanding the differences between Remisier vs Sub broker business models.
What is Remisier?
A remisier is an agent of the stockbroking company who gets them clients who can invest regularly through the broker. They basically work individually and solicit new business for the firm. For each client who invests they get a percentage share of the brokerage (commission the firm earns when the client invests).
The remisier also has to be registered with the stock exchange. However, it is a much simpler role than a sub-broker. The responsibilities of this profile are much easier in nature.
How is Remisier different from Sub-broker?
Let’s go down to the business and understand the differences between Remisier vs Sub broker.
The Sub-broker performs all the functions as the remisier albeit there is a slight difference. The sub-broker model is akin to a franchise model where the sub-broker might be an extension branch of the broker. They use the brand name of the broker firm and can have a physical location as well.
Further, a sub-broker can issue a contract or a confirmation note. A contract note is a confirmation of a trade on a particular day on behalf of the client. This basically means that the sub-broker can take the entire responsibility of the deal at his discretion.
Only the registered stock broker or a sub-broker can issue this note and not the remisier.
As explained above, if you are a remisier then even though you are acting as an intermediary between the client and the stockbroking firm, the responsibility of the deal always lies with the firm. You are just the agent working on their behalf.
Your job is to get the broker new clients who are looking to invest. Think of this as a more of an outside view of the deal. This could be a pro. Because it requires less time, it is often seen as a way to earn some extra income on the side, more like a passive income source.
Further, in terms of initial investment, less amount of deposit is usually required and some stockbroking firms ask for a zero-deposit fee.
Also, Remisiers usually do not require a physical location as well thus saving on investment even more.
The con, however, is that they earn less commission.
The percentage share of the brokerage earned from the client is really less as the stockbroking firm does the heavy lifting of research and responsibility of the deal.
Further, a remisier in some cases might be involved in the deal in a very limited capacity, going so far as to just being the introducers for the broking firm to the new potential clients.
On the other hand, sub-broker not only takes responsibility but also has to do much of the research, work independently and in some cases can also have a physical location to work from. Naturally, then they earn a higher commission.
The percentage share of brokerage given to them can go as high as 60 to 80 per cent. They also have the authority of issuing a contract note thus executing deals on their client’s behalf. They get access to broking firms trading tools and marketing material as well.
The con is that being a sub-broker, it requires a lot of time and research. There is more initial investment requirement as well both in terms of the security deposit and physical location as well. Some sub-brokers also require extra cash for setting up a computer system for research and need more employees as well.
Taking complete responsibility of the deal also requires being extra cautious and making sure everything is done according to the rules.
A sub-broker and a remisier perform the same functions although there is a small difference in both the terminologies as discussed above. Both professions have their pros and cons as well.
So, what do you think which one is better?
And what should you pursue if you want to get into the business?
The simple answer is: It depends on you. Each of them suits people differently. You need to ask yourself some key questions first in order to figure it out.
How much time can you give to this work?
How much start-up capital do you have?
Do you want to do this as a side business or are you getting into this full time?
How extensive is your network?
Further, when engaging in the stock market as an investor the distinction between sub-broker and the remisier needs to be kept in mind as well. After all, it is important to know who ultimately would be responsible for executing the deal for you.
Are you looking to set-up business in the stockbroking space in one form or the another?