Choosing a broker – First steps
Online brokers provide a wide range of services. Deciding which features will be most important to you is the first step in choosing the right one for your needs.
You may consider that research tools and services are not necessary, in which case you’ll be heavily influenced by those offering the cheapest brokerage commissions. On the other hand, you may feel that online tools, live market data and research services will save you time and money.
Most online brokers offer these additional tools in varying degrees and the complexity of the underlying software may vary considerably.
As a start, try and match yourself to one of the categories below:
New to the Internet and/or investing? A broker website’s overall service will be a critical factor. A broker with highly rated customer service will help ease your concerns as you get started. It’s important an online broker offers telephone trading as well. Additionally, you will value the ability to make telephone enquiries relating to questions unanswered by the website.
Long-term investor? Paying for additional research services or advice on a share portfolio you own for a number of years won’t dent your overall returns. Such costs can be amortised over the term of your investment. Since you’ll want to do extensive studies on shares or managed funds before buying them, a site’s research tools should be the most important factor in your choice. Particular research tools that you will be interested in are charting, portfolio management, company and fund profiles, access to floats.
You may also need assistance in interpreting available research information.
Active trader? If you buy and sell shares at least once a week, low commissions should be your priority. You may also require easy access to time sensitive information and software. Frequent trading discounts and dynamic live data and charting will be of interest to you.
Published: 6 June 2005