What are Stockbrokers?
A stockbroker or stock broker is a professional finance broker who makes a living buying and selling shares and other financial products on behalf of investors. Stockbrokers may act independently or be part of a broker agency.
Why use a Stockbroker?
Many people prefer to pay for the services of a broker as they feel more comfortable making decisions about investing in the stock market with the assistance of an industry professional.
Stockbrokers get paid a commission on the trades that they make on the stock market. In addition to getting paid a commission, stockbrokers are paid on a performance basis, depending on how well a particular stock performs on the stock market.
Different types of Stockbrokers
Stockbrokers come under 2 categories, full service brokers and non-advisory brokers. The basic difference is that full service brokers provide advice relating to investments, whereas non-advisory brokers do not.
Full Service Brokers
Full service brokers operate in a similar manner to financial planners in that in addition to offering advice on buying and selling shares, they can design a custom investment plan based on your requirements. As a result of this tailored schedule, a full service broker will charge a higher brokerage fee than a non-advisory broker. Not limited to providing advice on shares, full service brokers will also provide advice on warrants, options and futures
Non-advisory Brokers
Non-advisory brokers do not provide any advice on your decisions to purchase particular shares. For this reason, brokerage costs are lower and these brokers will be better suited to those investors that are confident in their share buying decisions. These brokers are either telephone or more commonly, Internet based.
How much brokerage does a stockbroker charge?
For a $10,000 trade you would expect to pay anything from $15 to $40 in brokerage when using a discount or online broker. If you were to use a full-service broker you can expect to pay $150 or more. At the time of writing, Bell Direct offers the most competitive rates with $15 per trade.
CANSTAR CANNEX Online Share Trading Awards
CANSTAR CANNEX provides fact-based data and ratings to Australian consumers and financial institutions. CANNEX star ratings are a consumer-friendly benchmark that help you compare financial products based on their rates and features.
In April 2009, they awarded 5 stars for outstanding value to the top three online trading accounts in
each investor category.
Investor
Bell Direct – Silver
CommSec – Share Trades Internet Preferred
First Prudential Markets – FP Online
Sophisticated Investor
CommSec – Share Trades Internet Preferred
Morrison Securities – htmllRESS
NAB Online Trading – Premium
Active Trader
Bell Direct – WebIRESS
First Prudential Markets – WebIRESS
Morrison Securities – WebIRESS
For more information, see the CANNEX CANSTAR website.
