A broker is a mediator between two gatherings who need to purchase and sell from one another. The intermediary, in this manner, encourages this exchange in and in the process gets paid a charge for the assistance administrations and different administrations carried for the two gatherings.
In the stock market, brokers facilitate the day to day transactions between investors and corporates and earn a fee from either side. However, some parties seek to bypass the intermediaries because of the fees rendered which reduce the profit margins of the transactions by increasing the cost.
Here are five ways that could help you sell stocks without engaging the services of a broker.
1. Direct transfer to a third party
After finding and agreeing with an interested party, you can change the name of the shareholder to a different name of the new owner. Transferring stock to a third party is basically changing the ownership and the right to manage the stock. The entire process of changing ownership of stock can be facilitated by the company’s investor relations office which most likely has contracted a transfer agent to handle the entire process on behalf of the firm.
2. Direct purchase plans
Many blue-chip companies have provisions for investor relations whereby investors can directly buy or sell the particular company’s stocks. Some companies charge a competitive fee for using their in-house services while others offer this services free of charge. Selling stocks directly offer the stock owner unadulterated per share pricing that is higher than the per-share price proposed by brokers because of the reduced amount and types of fees in the entire process.
3. Become a broker
Another way of avoiding the dealers is to become an agent. By acquiring the brokerage accounts, one can sell stock on your behalf and behalf of other stockholders directly to the company. However, this process might be expensive for individual investors with small volumes because opening a brokerage account requires an initial deposit whose value is determined by the market regulators.
4. Dividend reinvestment plans
Company-operated dividend reinvestment plans (DRIPs) are arrangements made by stockholders to reinvest the dividends earned from the investment without going through a brokerage facility. Putting this profit back in the company enables the shareholder to increase their stake in the company at a determined price per share without being charged commissions. However, the stockholder may only sell these shares back to the company or other shareholders with DRIP when offloading this stock and hence the intermediary is bypassed.
5. Selling directly to the company
Listed companies have investor relations departments that may allow share certificate holders to walk in and submit the stock certificate at the prevailing market price per share and the company deposits the equivalent in cash to the seller’s preferred mode of payment. Consequently, this process can be facilitated by the transfer agent of the company who is contracted independently as an outsourced service provider and not as a broker.
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