Percentage based brokerage made sense during the days of physical certificates and open outcry system of trading. It’s because larger the size of order, the harder the broker had to work to fill the trade.
Now, in the times of electronic trading, the effort required doesn’t change because the broker is only providing a platform and the cost of maintaining the back office and exchange membership fees remains the same irrespective of whether the client places an order for 1 lac or 1 crore.
The target market of these ‘full service brokers’ is still the older generation who aren’t so tech savvy and need an RM to chat with and execute their orders.