What distinguishes a broker from a trader?

The choice stating that brokers serve as sales agents, while traders execute trades based on portfolio manager instructions accurately distinguishes the roles within financial markets. Brokers are intermediaries who facilitate transactions between buyers and sellers, acting on behalf of clients to buy or sell securities. They may provide advice, but their primary function is to execute trades as instructed by their clients, which could include individual investors or institutional portfolio managers.

On the other hand, traders are responsible for buying and selling securities either on behalf of their firm or their clients, specifically according to strategies outlined by portfolio managers. This entails taking more actionable roles in terms of market timing and execution, as they make less independent decisions compared to brokers, who primarily consult and act on behalf of their clients. The focus here is on the nature of execution and the reliance on directives from portfolio managers for traders, contrasting with the facilitative role that brokers typically assume.