Picking a stockbroker is not all that difficult from choosing stocks. It all begins with knowing what your investment style will be and determining what your investment goals will be, aside from just making money! 

These days, we have many more options for brokers than the generations before us, but with variety comes complications. So, let us look at the broker types that are available to us out there, how they charge, work, and all the extra things you need to be thinking about before you make your choice. 

Also, note that there is not just one type of broker, there are two categories of retail brokers that you should pay attention to and consider before you make your choice as the responsibilities of a stock broker vary depending on which category they call into. Let’s look into this… 


What Is A Broker?

There are two types of brokers, generally. There are regular brokers, these brokers will usually deal more directly with their clients, and there are broker re-sellers, these brokers will act as a go-between between the client and a more prominent broker. 

A regular broker will typically be viewed with higher regard than a broker reseller. This isn't to say that resellers are bad, it is just worth giving them a once-over before you decide to sign up with one. 

A regular broker who works with a big company such as Capital One, Ameritrade, or Fidelity are recognized organization members, such as the SIPC, DINRA, and so on. You can find great Stock Brokers based in Australia with HALO Technologies.

Brokers, in general, are intermediaries between securities exchanges and investors. Securities exchanges are the marketplaces in which financial assets are sold and then bought. As they will only accept orders from those who are members, you will need a broker. 

The broker will buy and sell the orders for you. 

Brokers provide a service and will get compensation for their efforts via payment, fees, or commissions. 

Brokers may also just be order takers, they will execute trades that the client, i.e. you, wishes to make. However, many brokers will note themselves as being financial representatives or financial advisors and will do more than just this. 

Many will do market intelligence, planning for investments, and may do research for you as well as execute your orders. 


Discount Brokers Versus Full-Service Brokers: Know The Difference

There is even more distinction to be made between discount brokers and full-service brokers. As you can imagine, full-service brokers will typically offer you specific advice to you and your investments, and these services are hardly cheap. 

Full-service brokers will do a lot of the legwork for you. 

Alternatively a discount broker will often leave you to make your own choices, however, most will opt to offer you to solicit a broker for advice on particular trades for a price. 

For new investors, most recommend full-service, but it is not really ideal for younger people to go with this more very-expensive choice. Generally, online discount brokers will often give you a wider array of tools for those who are investing with all levels of experience. 

You learn more this way. Learn by doing! 


Be Aware of Costs & Fees

Most under-30s have a more limited budget, so paying attention to these fees is so important. However, there are other fees you need to think about. 

Being aware of the fees and charges you may incur is very important in making the most of your investments. 

Consider minimums which is the minimum balance to set up an account, online this will usually be between $500 to $1,000. 

You may not want to open margin accounts, but it is something worth thinking of for the future. These will often have higher minimum balances. But you should also check the interest rate that brokers will charge for the margin. 

Do not forget withdrawal fees as some brokers will charge fees to make withdrawals or will not allow withdrawals if your balance goes below the minimum. Some may also allow you to write checks against the account, but this will often be in pair with a high minimum balance.


Six Top Tips! 

• Discount Or Full-Service: Which Do You Need?

The first tip we will give you is how you choose between full-service or discount. 

It depends on experience. Using a full-service broker is more ideal for new investors, but they cost a lot so are not ideal for everyone. 

Discount brokers are only on execution, which makes them cheaper, but they are not as thorough, or intensive so are ideal for those who have experience. 

Generally, we recommend discount brokers unless you are really lost and have no idea what to do. It is always best to learn how to do this yourself if you can.

• Decide On Your Level Of Involvement

Consider the approach you will take to your portfolio involvement. Will you be more hands on with investments, or are you happy to let your broker do the heavy lifting? If your broker is doing the heavy lifting this generally means you would need a full-service broker. 

Depending on what you decide you will need a broker who is easy to access and who is available to you at all times as some days will be heavier on trades than others. 

You need a broker who is available to you when the market is open if this is the case. 

• Take The Time To Look At What Is Available

Rushing your decision with a broker is a bad idea. Making rushed decisions leaves lasting negative impacts on your finances, and it could take years for you to recover fully. 

Therefore, you need to take the time to browse around, look at the brokers who are available, and consider which ones are right for you. Consider your ideal markets, what your goals are, and which brokers would be most ideal for this. 

The broker is like a good vehicle, you need them to be top-notch, as they need to safely and securely work with your investment funds to turn and maximize profits. 

• Recommendations On Good Brokers Are Worth It

If you have any friends, colleagues, and so on who invest and use brokers, getting recommendations can be extremely useful. 

The best way to find a good competent broker is to use one that has been recommended to you by someone you trust. It is best to ask around those you know to see if there are any particular brokers people tend to lean towards, or if there is somewhere you should be looking that you have neglected to look at. 

It is also to ask around about why the people who chose certain brokers did choose those brokers in particular. 

• Reviews & Licensing Checks

You should always check a broker who has your best interests in mind, do not choose one who pushes you to make investments which only give them more commissions. Always ensure that you have information on the broker, including their strategies and background before you choose them. 

You should also check for adequate licensing and an understanding of their depth of experience. 

• Pin-Point Investment Strategies & Goals

Finally, you should always choose a broker that is in line with the strategies and goals you have in mind. The whole process is easier if you know what your goals and strategies are. 

You should always try to be on the same wavelength as the broker you use as it will help you maximize your investments. 

Consider if you want to invest in startups, or if you would rather play it safe. Look at how the broker views investing and what they think about it before they make an investment. Does it line up with what you want?