When you want to invest in the stock market, one of the first things you'll need is a stockbroker you can trust and who doesn't cost too much. At one point, people thought that stockbrokers were very expensive and hard to understand. In the world we live in now, stockbrokers are very different. They have started to make their services cheaper and easier to understand. This is a very good change because you won't be able to trade in any way without a stockbroker.
One of the most important rules of the stock market is that you can only trade there if you are a certified stockbroker. Every trade that happens on the stock market in the UK is done by a stockbroker. Twelve million investors do this, and they all use the services of a stockbroker.
So, you're probably wondering what a stockbroker can do for you. Any stockbroker can give you a wide range of skills and services. They will also charge you a wide range of fees. Most of the time, a stockbroker will charge a commission, a set fee, or a mix of the two. There are three basic levels of services that a stockbroker can give you: execution, portfolio management, and advice.
When a stockbroker only sells and buys the shares you tell them to, this is called "execution only," or "dealing only" if you want to be more friendly. When you use this type of service, they don't give you any advice about what you should do. Most of the time, this type of service is used by both experienced and new investors. Execution only is less expensive and works very well. The fees a stockbroker charges can range from GBP20 to hundreds of pounds, depending on which stockbroker you choose.
Portfolio management is the most detailed and expensive service. Getting advice from a stockbroker is usually a little more expensive than just executing trades, because the stockbroker will give advice and opinions about what's going on in the stock market. At this level of service, the stockbroker will also take the time to explain anything you might not fully understand.
You can also divide the portfolio management service into two other groups: advisory and discretionary. When you're in the advisory category, the stockbroker will make a portfolio proposal for you, but he or she won't do anything without your express permission. In the discretionary category, your stockbroker will take care of everything about your portfolio and send you reports on how it's doing as needed.
