Choosing a stock broker is a major decision and it actually be more complicated than it sounds. The right broker can open up the world of investing for you, while the wrong one pushes up your costs and limits your options. What should you do? Shay Benhamou has provided a guide to help you in choosing a broker for your trading needs:
Step 1: Decide where you want to invest
If you are planning to invest in shares that are listing in your local market, then you may find a number of brokers. However, Shay Benhamou says that the options may be limited if you want to invest in foreign markets. It is possible to have accounts with multiple stock brokers, but it is better to have a comprehensive account as it is easier to manage.
Step 2: Consider the costs
A number of investors focus on dealing commissions when they are considering costs. But, Shay Benhamou suggests that you also consider the myriad of other costs that stock brokers often charge. These could be account management fees, or currency conversion fees and more. They may offer you low headline dealing rates, but make up for these in other charges. So, you need to know the total costs and not just commissions.
Step 3: Think about the services
There are different types of stock brokers you will come across. Discount brokers, or execution-only brokers, just carry out your trading instructions. There are full service and advisory brokers that will discuss your portfolio and investment options. As per Shay Benhamou, the latter obviously cost more, but they can provide you more well-rounded services than any other option.
Step 4: Don’t pay too much attention to the bells and whistles
There are some stock brokers that will offer you very basic trading services and nothing more, while others will have a ton of other features like fundamental data, courses and what not. Yes, there is no doubt that these bells and whistles can be very attractive, but experts like Shay Benhamou warn that you shouldn’t become distracted by them. Don’t pay excessive attention to these when you have to make a decision.
Step 5: Check for flexibility and convenience
One of the most important features that you want to have in a stock broker is flexibility and convenience. Shay Benhamou suggests that you consider your own priorities when you are looking for a broker. For instance, if you want to minimize tax, then you need to ensure that the broker you choose can offer tax-advantaged accounts. Likewise, you will need a multi-currency account in the case of international investing. You may also want to check what currencies they support when you have to make transfers.
Step 6: Assess the service
It is possible for a stock broker to be good on paper, but their service may not be up to the mark in reality. This will result in a poor trading experience for you and it is something you want to avoid at all costs. Shay Benhamou suggests that you check out the reviews of the broker before signing up. These can provide insight into the kind of services you will get, but they shouldn’t be the only factor that affects your decision. Use the demo account of the broker to test their services yourself and this puts you in a better position.
Step 7: Don’t forget about security