Stockbroker Excellence: Range of Investments

In our range of ‘stockbroker excellence’ posts, we’re highlighting one differentiating factor which could make one UK stockbroker far more useful or appropriate for your circumstances. When comparing forex & CFD providers or indeed the best Stocks & Shares ISAs, you’ll want to hold each of these factors in mind.

If you become an expert at researching how each UK stockbroker scores against each factor, you’ll be in a position of power to pick the perfect investment partner for you. Only you will be able to choose the perfect broker that fits with your financial plan.

How do stockbrokers differ by the range of investments on offer?

Stockbrokers aren’t equal when it comes to investment choices. Here are the main types of accounts you will encounter, by level of freedom:

  1. Full choice of listed securities
  2. A choice of international shares from most stock exchanges
  3. A choice of major company shares from major stock exchanges
  4. Funds only
  5. Funds offered by a single asset manager only

1. Full choice of listed securities

This type of account is an all-access pass to a wide variety of financial instruments, plus collective investment vehicles such as funds and the best venture capital trusts. So long as a financial instrument is publicly traded on an internationally recognised stock, bond or commodity exchange then you will probably be able to trade it.

These powerful stockbroker accounts allow you to invest in bonds, buy shares, and even trade some derivatives.

These accounts are also known as ‘full service’ stockbrokers, and come with the highest levels of customer service and access to real people over the phone.

The trade-off is that they often have the highest dealing charges, such as trading fees which can exceed £10 per trade.

The versatility of the accounts means that it might be the only stockbroker account you ever need, no matter how complex or adventurous your investment portfolio becomes.

However, if you don’t plan to make use of all this breadth then you may feel like you are paying for the Rolls Royce of stockbroker accounts, only to never really use all the extra features and service which you are paying for.

Examples of full service stockbrokers include:

  • Investec Wealth Management
  • Canaccord Genuity

These are listed as illustrative examples and are not endorsements of any kind.

2. A choice of international shares from most stock exchanges

These accounts offer a huge list of shares, but don’t guarantee access to niche companies on emerging market exchanges. They represent one step down from a premium full-service stockbroker.

High street banks and the largest stockbrokers tend to offer trading accounts which sit at this level in the investment range ranking.

From experience, we’ve found that most armchair investors who actively trade stocks and shares simply won’t notice the restrictions in place, unless they’re looking for companies with very low trading volumes and penny stocks.

So long as you are interested in buying shares in the largest companies (Such as those which feature in the FTSE 350 or S&P 500) then you’ll find that these accounts offer you the opportunity to take a stake in each company on your buy list.

Examples of UK stockbrokers with a wide range of equities to trade include:

  • Interactive Investor
  • Hargreaves Lansdown
  • Barclays Smart Investor

These are listed as illustrative examples and are not endorsements of any kind.

3. A choice of major company shares from major stock exchanges

These brokerage services only offer the most popular shares which trade on major exchanges.

  • Large companies on western stock exchanges
  • Household names on the emerging market or far east stock exchanges

If you’re looking to trade the news, or favour investing in companies you’re already familiar with, then this type of broker could be perfect for you.

Sticking to popular shares doesn’t mean you can’t build a geographically diverse portfolio. Even restrictive services could provide some Korean stocks, but perhaps only Samsung, LG, Hyundai and Kia.

The upside of services with limited range of equities is that their user interface is often more user friendly. These services tend to provide:

  • Modern investing apps
  • Fractional shares
  • Instant cash settlement of trades
  • Zero trading commissions

The perks of one of these investing apps can be so generous that many investors choose these accounts over the more expensive stockbrokers which offer the more obscure investment options.

Examples of UK stockbrokers allowing trading in only popular equities include:

These are listed as illustrative examples and are not endorsements of any kind.

4. Funds only

Stockbrokers which focus on providing a dizzying array of funds to investors are also known as ‘fund supermarkets’. They’re ideal for active and passive investors alike, as active funds are featured just as prominently as passive index trackers.

Fund supermarkets may offer preferential charges on inward investments into funds – which can sometimes be as attractive as fee-free fund purchases. (Annual charges within the fund and the investment platform will still apply).

Examples of UK fund supermarkets include:

  • Bestinvest
  • Charles Stanley Direct
  • Fidelity

Some of these providers also offer ordinary stockbroking offerings in addition to funds.

These are listed as illustrative examples and are not endorsements of any kind.


5. Funds offered by a single asset manager only

Some investment platforms are operated by an asset manager or fund manager, and allow investors to directly invest in closed-ended funds or ETFs without using an intermediary.

These accounts sometimes offer cheap access to funds and discounts on annual management charges.

However, in return the investor is ‘locked in’ to that single provider for investment opportunities. The investor will need to open a stockbroker account elsewhere if they wish to invest in funds offered by another financial provider.

Examples of provider-specific fund accounts include:

  • Vanguard Investor

These are listed as illustrative examples and are not endorsements of any kind.