Tools And Instruments | Brokers - The Good, The Bad And The Ugly

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27th May '09 by omh

6 comments 2494 reads

We all use them, from full service to cheap as chips, from full managed portfolios to execution only.

Who does what well? Who costs a lot but is worth it? Who should we avoid?

omh

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Omh

Premium Member

6 comments

omh

27th May '09

I have started this thread as a way of exchanging information on the brokers we use. As I state in the intro, there are a wide variety of offerings, at an equally wide range of prices. In my case I want a broker who can deal online (predominantly) and action requests in a timely manner at a reasonable cost.

I am currently with Selftrade but not for much longer. Those who frequent another place will be familiar with the reasons why and I am in the proces of opening accounts with both interactive investor and HSBC before transferring my dealing and ISA accounts across.

If any current II or HSBC clients could pass on any good or bad experience with them I would be obliged.

imh

Gradders73

28th May '09

For ISAs etc, I have been using Halifax Sharedealing. They are surprisingly sophisticated and don't make me feel like I am a hapless mug from a scene from "Boiler Room." Spreads are tight and commissions pretty reasonable...

SteveM

28th May '09

I use Barclays and have done since they were Charles Schwab, which is quite a long time. They have suffered in the recent past from not being able to cope with volumes particularly well, which has meant that their web site has sometimes collapsed under the pressure, and it has also been difficult to get through on the phones. Having said that, I have noticed some improvement recently, and their customer service has been pretty good, with a willingness to be flexible in order to retain customers.

My main gripe with the online platform is the inability to cope with scrip dividends, which irritates me as the only way to keep track of these is to keep a record of numbers of shares before and after the dividend. Other than that, their dealing facilities are pretty reasonable when they're working OK - their 'Quote and Deal' facility will often get me a price well within the spread.

The other thing they don't have is Direct Market Acess, which I would find useful on some occasions.

Otherwise, not bad.

Cheers,

Steve.

barkingatshadows

28th May '09

Have been quite happy with selftrade, £12.50 per transaction, however they have just introduced an annual management fee of £35 + vat. This can be offset by some commision free trades, so frequent traders may not be much worse off. However the young traders of tomorrow with perhaps a few hundred pounds invested with selftrade, and cannot afford to be frequent traders will be forced to cancel their accounts, as their limited funds will start to be eroded away. Strange strategy.

peterg

28th May '09

I currently use Selftrade, Barclays and iDealing. I have no real complaints about any of those, though I still tend to believe that Barclays were better when they were Schwab and Selftrade were better when they were Comdirect, but that may just be because I've got the age where I tend to think everything was better when I was younger!

I used to use Interactive Brokers who were great if you want to trade in a range of instruments across a range of currencies, but they really only made sense for me when I used to trade on a much more active basis than I do these days (several times a day instead of a few times a year!)

I think who is good and who isn't depends a great deal on what you want to do and what your circumstances are. I find Selftrade and Barclays more than adequate for my needs, and though I know there have been complaints about Selftrade's customer service recently (which certainly isn't what it once was) it's more than adequate for my needs. For me annual charges are proportionately so small that I don't really pay any attention to them, and much the same applies to execution charges, the difference between £7.50 and £12 or so doesn't really attract notice. That may well not be the case for those with smaller amounts invested. I also have the great bulk of my investments in ISAs, which limits the range of brokers I can use (Interactive Brokers is out for example).

While I can understand grumbles about increased standing charges from Selftrade, at least, I can't say I'm surprised. Brokers must have taken a big hit in the number of executions they are dealing with, and I'd imagine it may take some time for those to recover fully. For those with accounts such as mine that are traded perhaps 4-5 times a year in each account, or less, I've often wondered how they make any money out of me. Of course those who trade more will contribute a lot more to the brokers coffers, but then for them an annual charge of £35 is pretty irrelevant against the total they will pay annually in commissions, for them the cost of commission is going to be far more relevant than any fixed charge.

So if you are looking for a broker I'd say first of all be very clear about how big your account is going to be, how big your trades are going to be and how frequent, what sort of stocks and instruments you want to trade and what sort of accounts you are going to have (are they going to be ISAs?). Then look at those that get mentions here on the other board and check out their charges, ranges of instruments tradedetc before you do anything else.

Peter

promethean

28th May '09

Peter - from what I've read lately, brokers and spread betters have been having more execution activity than at any time in the last 10 years... there was a FT Article on the 15th May that stated TD Waterhouse and Barclays had been overwhelmed by activity - especially in the banking sector.

I personally have used TD Waterhouse, and while i appreciate some aspects of their service, they have removed the Cash Management Service (credit card / cheque book) which I found very disappointing. They've also given some shocking execution - and if you are using an execution only broker... make sure you NEVER put in a market order - they really do just throw it to the mercy of the market... I had one trade executed up to 15% off the market...

once bitten, twice shy.

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Brokers - the Good, the Bad and the Ugly

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Omh

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