The Difference Between an Agent & Broker in Investment Banking

by Jacquelyn Jeanty

The investment banking industry markets and sells a wide range of finance-related products and services. Agents and brokers can work within different areas of the financial sector fulfilling different roles. Differences between agents and brokers have to do with the types of people they work with and the actual tasks they perform within these positions.

Investment Banking

Investment banks provide individuals, companies and governments with financial advice, investment opportunities and credit financing for a wide range of purposes. Investment banking activities include investor portfolio management, advisory help for company mergers and acquisitions and stock market analysis services. Investment banks can also play an active role within the stock market through the buying, selling and trading of stocks and bonds on behalf of their clients. Companies looking to sell their stocks at public auction call upon investment banks to coordinate and handle the actual issuing of company stock. Agent and brokers carry out various roles within the different areas that make up investment banking.

Investment Banking Agents

One of the primary functions of an investment bank has to do with underwriting projects for large companies. The underwriting process involves securing financing for businesses that wish to expand. Financing often comes in the form of stock and bond issues as a way to attract investor monies. Investment banking agents seek out businesses in need of financing and connect them with potential investors. In effect, agents must sell their advisory services to potential clients. Afterwards, agents play an active role in selling stock or bond issues to interested investors.

Investment Banking Brokers

Investment banking brokers function as a type of agent that specializes in selling securities products, such as stocks, mutual funds and bonds. Brokers work with a wide variety of people and businesses that may have small or large amounts of money to invest. Investment banking brokers work in conjunction with a securities exchange market, or stock market. After completing a sale with a client, brokers notify floor traders of the sale and receive a commission for performing the service. Clients wishing to sell their stock or bond shares also pay commissions to brokers. A large part of their role involves finding potential clients through phone solicitations and referral sources.

Stock Market Roles

Agents and brokers within the investment banking industry handle many of the transactions that take place on the security exchange floor. The buying, selling and trading of securities involves ongoing transactions between brokers, traders and agents. Brokers who work on the floor -- also known as floor brokers -- handle stock sales transactions for individual companies and collect a fee for their services. Brokers also communicate stock price changes to investment agents, who then relay this information to their clients. Independent investment brokers may also work on the securities exchange floor as free agents. As free agents, independent brokers can contract with individual companies or assist floor brokers with sales and trade transactions.

About the Author

Jacquelyn Jeanty has worked as a freelance writer since 2008. Her work appears at various websites. Her specialty areas include health, home and garden, Christianity and personal development. Jeanty holds a Bachelor of Arts in psychology from Purdue University.