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What makes a great online share dealing broker?

What makes a great online share dealing broker?
Image source: Getty Images.

You’ve made the decision: You want to take control of your financial destiny. But how do you know you are choosing the right online share dealing broker?

With the continual addition of new online share brokers, it can be a challenge to find one that meets your needs, but isn’t going to charge excessive admin or trading costs. The following points are what I take in to account when evaluating brokers.

First: three critical questions

  1. What type of investor are you? Are you an inexperienced, casual investor; an active trader; or an expert investor? This will impact the features you’re looking for in an online broker and their dealing platform. From the ease of use of the platform through to the volume and type of company research and analysis available, it’s crucial that the platform matches your investing needs. If you are new to investing, then a platform with greater access to research and educational content may suit you better.
  2. How often will you trade? Fees are always a key part of the equation with a broker, but the more frequently you trade each month, the more likely you will need to consider the fees that are charged with each trade. This cost can add up very quickly. If you are more active, then you may want greater access to company analysis and research.
  3. What products will you be trading? Shares are probably the security you’re most likely to trade, but you may want to trade a wider range of securities, so check to see the platform offers these options. You may also consider whether you want access to international shares or just UK shares.

Next: consider the features

Once you have established what type of investor you are likely to be, the following features should be considered when comparing rival platforms.

  • Fees. This probably isn’t breaking news to you, but every online dealing platform will charge you a fee for your buy and sell transaction. Fees range from £1.75 through to more than £12. For larger trades, fees may be calculated as a percentage of the transaction amount. Some brokers will also charge an ongoing annual or monthly fee on top of this if they provide extra features such as research or recommendations.
  • What and where can you trade? The better dealing platforms will allow you access not only to UK listed shares but also international markets, giving you the ability to invest in companies from around the globe. Check on the types of securities that the dealing platform allows you to invest in. You may only wish to buy and sell shares, but other products may interest you. Such as: options, shorts, ETFs, indices, currencies and more.
  • Transaction options. When it’s time to buy and sell products, you may want to consider what options the platform offers. Can you place your buy and sell orders at market, at limit or conditionally? Does the platform allow you to put in stop loss and take profit orders as an option to add more flexibility to your investing? Depending on your investing style, that could help push you towards or away from a broker. However, if you’re new to investing and much of that sounded like gibberish to you, that’s ok! For most investors, having the ability to transact at market and to place limit orders is enough, and I haven’t run across a broker that doesn’t offer that.
  • Useability and mobility. How easy is the platform to use? Does the platform offer market depth information? Are the prices real-time or on a time delay? Look for a platform that allows you to move effortlessly across the site so you can make good decisions based on accurate, up-to-date information. Not all platforms offer mobile apps, and some that do don’t offer mobile trading. If staying in touch and having the option to transact while you are out of the office or home is important to you, then look for a platform that offers a quality app.
  • Research. Many platforms offer some type of research, analysis and buy/sell recommendations. Some of these recommendations need closer scrutiny, as it’s in the platforms’ interest for you to invest and trade more, but they can usually at least be used as an additional source of information. You should always do your own research to back up any recommendations you receive.
  • Education. Does the platform offer any educational content and resources? This is especially important for the beginning investor. How-to guides, explanations of terms and webinars, all help you get the most out of your trading account.
  • Security. How secure is the platform and what measures are in place to ensure the safety of your funds? Has the platform had any security breaches in the past? What processes are in place to deal with fraudulent activity? These are important questions for a platform to provide, as no-one wants to have their capital at risk to cyber theft.
  • Investor support. What support can the platform provide when you need it most? What are the hours of support that are provided? Is it 24/7 or 9am to 5pm? Try and look for a platform that offers a combination of online, phone, email and live chat support.

Finally: bring it all together

Hopefully this has helped you gain some insight into yourself as an investor, as well as the share dealing offerings that are out there. As with every product, there are features and product designs that are ideal for some people… but not so ideal for others. And while missing out on features important to you can lead to a bad experience, choosing a product with features you don’t need can land you with higher fees than necessary.

By considering the above factors, I hope you’ll be able to narrow down your choices to the share dealing broker that best suits your needs.

Are you overpaying in broker fees?

Share dealing fees are not always straightforward. Use our free broker cost calculator to easily compare broker fees and see which providers listed offer the best value. 

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