Of all the decisions made in setting up your own business, choosing the right broker should be one of the most important. The primary function of any brokerage firm is to make it possible for clients to buy or sell stock on their behalf via an exchange. Brokers are paid mainly by the commission, so they earn nothing if deals are not done. It makes them naturally cautious and more risk-averse than investors themselves. They owe their clients a duty of care regarding how brokers treat their customers and what level of interest they must show in their investments.
How Do You Select the Best Broker?
Choosing a broker in the UK can be difficult. Choose poorly, and you may lose your money or, worse – run into problems with the law. Tips to help you choose a good broker:
A quick Google search will reveal whether or not an online brokerage is registered with the Financial Conduct Authority (FCA). Alternatively, go to www.fca.org.uk/register, type in the firm’s name, and check if they are listed. If they’re not, avoid them like the plague! The FCA is responsible for regulating financial services in the UK; it’s unlikely that brokers they don’t regulate are legitimate operations. Any claims made by these companies probably won’t be honoured.
Next, check out the company on Social Media such as Twitter and Facebook. Have other traders had bad experiences with this brokerage? What do they say about them online? A reputable firm will have many happy customers. Understandably, not everyone can stick to a business plan. Some customers may leave due to unforeseen issues, but check out how long these reviewers have been clients of the broker – if they were unhappy, then why haven’t they moved their money elsewhere? If you see lots of people complaining about one particular broker over their customer service or unresponsiveness, chances are you’ll have the same experience and should avoid them.
Are commissions charged? If so, these should be made clear to you before you start trading, and there should be no surprises afterwards. Your preferred broker should make it easy for you to view their fees; these can be found on their website or perhaps by contacting them directly. Are the fees reasonable? Do they charge more than other brokers? How does this compare to similar operations? Are withdrawal charges too high? Are platform fees included in the price shown to you upfront? These are all essential things that must be considered when choosing a broker.
Minimum Deposit Requirements
Does the brokerage require a large minimum deposit? If so, will you be able to afford this? Are withdrawals difficult? Is the brokerage’s account type suitable for your needs? Choosing a broker with lower minimum requirements could save you money in the long run.
Range of Assets Offered
Finally, check out what kinds of assets are available to trade: stocks and shares, indices and forex contracts. It’s wise to find a brokerage that specialises in the kind of trading that appeals to you: trading indices is quite different from trading shares, after all. Do they offer tax wrappers such as ISAs and SIPPs if you’re not based in the UK, for example? Do they offer support for beginners? If you’re new to trading, give careful consideration as to whether the brokerage caters to your needs.
Yes, choosing a broker can be difficult, but it doesn’t need to be. Avoiding the bad brokers and finding those with good reviews will save you time and money in the long run. Saxo is an excellent brokerage to look at.
These steps should help you choose a reputable and reliable brokerage that meets your needs as a client. Remember not to hesitate to get in contact with them if something does go wrong. Brokers provide value to clients who trust them with their money; losing such trust isn’t worth it. Finding a good broker is hard work but well worth it in the end.