Free Investment Advice

Source: 77finance.co.uk There are a number of considerations when choosing stock brokers.

* Discretionary, advisory or execution-only? If you are lacking confidence, choose a discretionary or advisory broker. More confident investors should choose an execution-only broker to save on the dealing fees.
* Telephone or Internet access? Whilst some brokers offer both telephone and online dealing services, others are more restrictive. Typically, telephone dealing is £5 more expensive per trade.
* Market availability? There are a huge range of investment products on the market, many of which are now available through the online brokers. These can include UK and overseas equities, PEPs, ISAs, funds, small cap/OFEX equities, CFDs, covered warrants and spread betting. Both the products and prices vary from one broker to the next.
* Availability of additional services? These can be divided into services to help with your trading - such as ‘price improvers’ and limit orders - and information services, such as charting, research, level 2 pricing and broker tips. Make sure you are not paying extra for a service that you are not going to use.

Typical Charges

There are a number of costs to consider when choosing a new broker.

* Dealing commission - all brokers charge dealing commission on stock purchases and sales. Some charge a flat fee regardless of the size of the trade - others set their commissions as a percentage of the trade value. Expect to pay upwards of £7 through the cheapest broker and £10 - £12.50 to trade through a broker with a wider range of services.

* Quarterly or annual admin charges - many brokers charge either a quarterly or annual fee to cover their ‘administrative charges’. Some will waive these fees if you trade every quarter, whilst others never make these charges in the first place.

* Other admin fees - these can include registration fees, custody fees, limit order charges, transfer out fees, charges for issuing stock certificates and corporate action fees. But again, not all the brokers charge for these services

* Statutory fees - you will be charged a £1 PTM (the Panel of Takeovers & Mergers) fee on all transactions over £10,000 and Stamp Duty at 0.5% of the value of the share purchases (1% on Irish Stocks and 0% on Exchange Traded Funds).

Product Range

AOutside of the traditional UK equity markets, there are now a huge range of investment products to choose from, many of which are available through the online brokers.

* Funds. Many brokers offer access to a range of funds (investment trusts and exchange traded funds), whilst some offer full fund supermarkets for those looking for more choice.

* Small cap and OFEX shares. Small companies and start-ups not traded through CREST and therefore not available through the majority of online brokers. Potential high returns for those prepared to accept volatile price movements, high dealing charges and a higher level of risk.

* International stocks. It is now easy to trade European and US stock through a UK dealing account. Check whether your broker is offering direct access to the overseas markets or limited access through the London Stock Exchange’s International Retail Service.

* CFDs. Derivative instruments designed to replicate the performance of conventional shares, but with far greater leverage - small fluctuations in the underlying share price can quickly lead to profits or losses far in excess of your initial deposit. This is a high risk investment that can be used in both a rising and falling market.

* Spread betting. Speculate on a variety of financial markets or sporting fixtures. The market quotes a likely outcome on the event - the ’spread’ - and you bet on each point that you think the index will move away from this spread. Again, a high risk investment that you can use in a rising and falling market.

* ISAwrappers. Many brokers now offer self-select ISAs which allow you to decide for yourself which equities, investment trusts, ETFs, unit trusts or gilts to hold in a tax-free ISA wrapper. Invest up to £7,000 per tax year free of Capital Gains Tax.