Are you looking for a broker…
… and are wondering where to start?
You may be looking to trade stocks, exchange-traded funds (ETFs) or contracts for difference (CFDs) very actively.
Alternatively, you may be looking to buy-and-hold.
In any event, you will need a broker.
It may be that your bank offers an online brokerage service. If you have a good relationship with your bank, it may make sense to use its brokerage service. We make no recommendations, but note that, for instance:
- Santander, offers some advice and provides access to around 950 investment funds through its Investment Hub.
- Barclays provides online tutorials and gives access to both shares (including international shares) and funds.
- HSBC makes it easy for its clients to trade shares and funds through its InvestDirect and InvestDirect Plus account. The latter provides access to US shares that are listed on the New York Stock Exchange and Nasdaq.
Aside from the banks, there are literally dozens of brokers who offer their services to UK-based investors.
In general, brokers come in three varieties.
- Execution-only brokers just undertake trades for you. You make the decision what to trade, when and at what price. This group generally has the lowest costs.
- Conversely, discretionary brokers and investment managers take the decision for you and execute the trade. You entrust the management of your portfolio to them. Because they provide a higher level of service, this group generally has the highest costs.
- In the middle are advisory brokers. They will provide you with advice as to what – and when – to buy and sell. However, you remain responsible for actually making the trade.
Perhaps the most comprehensive list of brokers serving UK clients is offered by the London Stock Exchange. Many of these brokers provide you with the ability to trade online.
If you want to buy/sell share X or ETF Y or CFD Z through Exchange A (which is not necessarily the London Stock Exchange) you can do so whenever A is actually open for trading.
In choosing a broker, you should bear in mind several questions:
- Is the website easy to use?
- Does the broker actually give you access to the shares, ETFs or CFDs that you want to trade?
- What level of client support is offered? Can you be certain of speaking with an actual person when you want to do so?
- Are your investments held by a custodian (usually a very large bank) that is independent of the broker? The answer should be yes: if the broker runs in to financial problems, your investments should be safe.
- What are the backup options if the broker’s website crashes?
- What are the terms and conditions to which you have to agree?
- Are you paying for services that you don’t want? For instance, there is no point in paying for an advisory service if you just want an execution-only service.
- What are the costs?
There are a number of brokers whose names often crop up in “Top 10” lists and in our discussions with subscribers. These brokers, and links to details of the costs that they charge, are shown below. Once again, we make no specific recommendation:
If, after researching which is the best broker for you, you have difficulty in finding the right one, let us know. We will put you in touch with TwoWayMarkets who can point you in the right direction.
Southbank Investment Research
NB This note is based on the relevant sections, written by Nick Hubble and Connor Coombe-Whitlock and edited by Rob Marstrand, of a special report (2020) The Road To Financial Freedom.