Most investors buy stocks through a broker. Brokers make trading fast, convenient and increasingly affordable — most charge $0 commission to trade stocks and exchange-traded funds (ETFs).
But it’s also possible to buy stocks without using a broker, and this approach — though it may be slower and less flexible — can be a practical way to make scheduled, recurring investments or take part in direct company programs.
Why would you want to buy stocks without using a broker?
Most investors use brokers for convenience, but some want to buy stocks directly from companies. While fee savings aren’t a strong reason since most brokers now offer commission-free trades, direct purchase can provide unique benefits:
- Registered ownership. When you buy directly, your name is recorded on the company’s books as a registered shareholder, rather than holding shares indirectly under the broker’s street name.
- Simplicity for focused investments. Direct purchases can be appealing if you want to invest in just a few specific companies without opening or managing a brokerage account.
- Hands-on investing experience. Managing your investments directly with a company can give you a more tangible sense of ownership and control over your shares.
How to buy stocks without a broker
Buying stocks without a broker essentially means buying shares directly from the company or through programs that don’t require a brokerage account. Instead of using a platform like Robinhood or Charles Schwab to execute trades, you interact with the company or its transfer agent.
Buying stocks without a broker using Direct Stock Purchase Plans (DSPPs)
A Direct Stock Purchase Plan (DSPP) lets you buy stocks directly from a company instead of using a broker.(1)This lets you skip the middle man, avoid any commissions or exchange fees and purchase shares directly from a company.
However, DSPPs may have minimum purchase requirements and charge transfer fees. What’s more, the price you pay may not be the current market price.(1)Instead, funds from all investors are pooled and used to buy shares at regular intervals. The price you pay is based on the average share price during that period. With market fluctuations, the price you pay could be higher or lower than the current market price at the time you make your investment. So, DSPPs aren’t completely without drawbacks.
As with many brokerage accounts, DSPPs often allow you to set up automatic purchases and, once you own shares, participate in Dividend Reinvestment Plans (DRIPs) to reinvest dividends automatically without going through a broker. While DSPPs may be slower and less flexible than using a brokerage account, they provide a direct and consistent way to invest in specific companies over time.
Computershare
Many companies use Computershare to manage their DSPPs. Computershare is a stock transfer agent that manages the administrative side of stock ownership, including DSPPs and dividend reinvestment. Examples of companies that use Computershare for their DSPPs are Nike (NKE), Coca-Cola (KO) and Walmart (WMT).
Here’s how to use Computershare to buy stocks without a broker:
- Go to Computershare’s US website and select Make a stock purchase.
- Select a company to invest in and review that company’s direct stock purchase plan details. Select Invest Now when ready to invest.
- Complete the investment details by providing the frequency of your investment, amount and withdrawal schedule. Select Next.
- Enter personal information such as your name, Social Security number and contact information to create a new user profile. Select Next.
- Choose your tax status, provide your bank account information and choose a dividend reinvestment frequency.
- Review your information and submit.
Buying stocks directly from companies
While some companies historically allowed one-time purchases directly from their transfer agents, today most direct stock purchases are made through DSPPs. True ad-hoc purchases outside these programs are rare and usually require contacting the company’s investor relations or transfer agent directly. For most, DSPPs remain the primary way to buy shares directly from a company without using a broker.
Advantages and disadvantages of not using a broker
Investing without a broker has unique benefits and trade-offs, and understanding them can help you decide if this approach fits your goals and investing style.
Advantages
- Direct relationship with the company. You interact directly with the company or its transfer agent, giving you a more personal connection to your investment.
- Structured recurring investments. DSPPs often let you make scheduled purchases directly with the company, often in modest amounts that meet the plan’s minimum investment requirements.
- Participation in DRIPs for automatic reinvestment. Dividends can be automatically reinvested to buy more shares, helping your investment grow steadily without extra effort.
Disadvantages
- Slower trade execution. Purchases are processed in batches, so you cannot buy or sell shares instantly at market prices.
- Limited access to most stocks and ETFs. Only certain companies allow direct purchases, restricting your options for diversification.
- More administrative work. You must track dividends, taxes and shareholder communication yourself.
- Less flexibility compared to using a broker. You face limitations on timing, liquidity and access to research or portfolio tools.
- Minimum purchase requirements. Most DSPPs require a set minimum investment, which makes it harder to start with very small amounts compared to a broker. Most brokers today offer fractional investing, letting you buy stocks with as little as $1.
Why use a broker to buy stocks
Even though it’s possible to buy stocks without a broker, there are clear benefits to using one:
- Speed and flexibility. Brokers allow you to trade hundreds of different stocks, ETFs and other securities instantly at current market prices and from a single account.
- Convenience and automation. Brokers handle account statements, dividend tracking, tax reporting and offer tools for recurring investments and portfolio management.
- Access to research and educational resources. Many brokers provide market research, analysis and trading tools to help investors make informed decisions.
- Commission-free trading. Many modern brokers offer $0 commission on stock and ETF trades, making investing more affordable and accessible than ever.
- Security and regulation. Brokerage accounts are typically insured through the Securities Investor Protection Corporation (SIPC) and subject to regulatory oversight, giving added protection.
- Easier diversification. Brokers make it simple to build a diversified portfolio across multiple asset classes.
Using a broker is generally the preferred choice for investors who want speed, flexibility, convenience and access to a broad range of investments, even though direct company purchases remain a viable option for specific long-term strategies.
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Bottom line
While buying stocks directly from companies can be appealing for long-term investors seeking simplicity and direct ownership, using a broker offers a significant advantage in terms of speed, flexibility and access to a broader range of investments. For those looking to trade stocks efficiently and effectively, selecting the right brokerage account is crucial.
