July 2001 Volume 82 Number 7
"serving the protectors"
| July 2001 Volume 82 Number 7 "serving the protectors" |
|
Shares |
|
| By Ruth McCance, ASX Investor Education |
Finding the best broker for you
To buy or sell shares in companies listed on the Australian Stock Exchange (ASX), you will need a broker to execute the trade on your behalf. The last few years have seen enormous growth in the choices available in regards to investing in shares, however a few simple questions will help you identify the best person to assist you to begin investing in shares.
What is a broker?
A stockbroker is a securities (shares) dealer who can execute trades on ASX. To do this, brokers must be admitted as participants on ASX. This means they must comply with ASX’s Business Rules, which require brokers to meet minimum standards relating to their financial position and conduct.
Many people also deal in securities through a financial planner. As only brokers can buy or sell shares on ASX, financial planners use brokers to execute share trades on their clients’ behalf.
There are three broad categories of stockbroking firms:
- Full service, which offer a range of services including advice on shares, personal investment plans, retirement planning and research. Their fees are generally the highest.
- Discount, which mostly offer a low-cost service to execute buy and sell orders, however you will not receive any advice.
- Internet/on-line, which usually offer low trading costs, convenient access to current share prices, the broking firm’s stockmarket research and market commentaries.
How do I choose?
The first question is, “Do I want advice?”. Your answer will largely depend on your level of investment experience and the amount of time you want to dedicate to managing your investments. Generally, both brokers and financial planners will be able to advise and assist you to invest in securities. Traditionally, full service brokers offered advice primarily on investing in shares, however many full service brokers now also offer general financial advice.
There are 16 full-service brokers and many financial planners with offices in South Australia. It is worthwhile taking time to find someone that is experienced in investments relevant to your financial goals and needs, as you may be dealing with this person for many years. ASX offers a broker referral service through their website at www.asx.com.au or by calling 1300 300 279. It is often helpful to meet two or three people from different firms to discuss your own financial objectives and the services you can expect to receive. You should generally be cautious of anyone who suggests products or shares before they are aware of your financial needs and objectives. Don’t Kiss Your Money Goodbye, prepared by ASIC and the Financial Planning Association, has more information. It is available at www.asic.gov.au or by calling 1300 300 630.
If your answer is, “No, I don’t want advice”, then you are most probably looking for a discount or internet broker. Brokerage rates are typically linked to access to services, such as more detailed research or automatically updating live share prices. Your needs will determine what is best value for you. If you intend to hold the shares for five years, you may decide that e.g. live streaming share prices are not necessary. Questions you may wish to ask include: How long does it take for my order/amendment to reach the market (normal and peak times)? What checks are in place to prevent obvious errors such as typing $30.00 instead of $3.00?
On-line brokers often have a pricing policy that includes a monthly subscription fee for accessing the research and market commentary material. Fees for each transaction begin at around $16. Full-service broking fees are usually on a sliding scale and typically begin at around 1.5% and 2.5% of the funds invested and are often negotiable.
Your broker or financial planner will give you an information pack which details their schedule of fees, their code of conduct (such as disclosing any interest in products or shares they recommend) and your obligations, such as establishing a cash account to pay for your shares. It is important to make sure you understand all of this.
You can always change your broker or financial planner, but with some thought and research you should be able to find the right person or service to meet your needs as you begin investing.
This article contains general information only. It is not intended as and must not be relied upon as investment advice. You should consult a licensed professional advisor prior to making any investment decision.
The information contained in this article is provided in good faith and derived from sources believed to be accurate as at the date of publication. However, no warranty of accuracy or reliability as to such information is given. Australian Stock Exchange Limited and its associated and related companies will not be liable for any loss or damage arising in any way from or in connection with anything provided in or omitted from this article or from any action taken or inaction in reliance on the article. This article does not contain an invitation or offer to invest in securities or other financial products and nothing in this article is to be taken as ASX endorsing promoting or expressing any opinion on any securities or other financial products.
©Australian Stock Exchange Limited ABN 98 008 624 691. All rights reserved.
|
||||||||||
|
The Police Journal Online is an
official publication of the Police Association of South Australia and is
published monthly. Editors of kindred publications can seek permission from the Editor to re-publish any Police Journal Online article. Copyright 2001 The Police Association of South Australia sustance |