How shares are traded

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3. Choosing a discretionary or advisory broker

Once you've decided what type of broker you want, you then have to decide which one to actually choose.

If you want a discretionary or advisory service, the best way to choose a broker is by asking friends and family if they can recommend a firm.

Ask them if the staff are helpful, and if the dealing is efficient.
Ask them if they have had any problems with the firm
Ask them how much they pay in commission and dealing charges

Remember, there are hundreds of brokers to choose from, and they need you more than you need them. You can get a comprehensive list by contacting The Association of Private Client Investment Managers and Stockbrokers which represents 90 stockbrokers throughout the UK.

Having shortlisted firms, the best thing to do is phone them or write to them, and ask for a meeting. The good ones will respond enthusiastically, and tell you what you need to know:

their commission charges
whether they charge a management fee
whether they run nominee accounts (more on this later)
how they would plan to manage your portfolio, and what returns they think they would get you
who would be managing your portfolio (is it the person you are meeting?)
how often they will send you portfolio valuations
what kind of end-of-year tax package they provide
what other information they provide (a newsletter?)
whether they have any ancillary financial expertise in areas like pensions

and not forgetting

whether the firm is a member of the London Stock Exchange.

The Financial Services Authority runs the Financial Services Compensation Scheme for clients of member firms that go bust.

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