Questions to ask your broker

What type of services do you provide?

A full service broker may offer advice, research, access to floats, access to their internet site, financial planning. A non advisory (phone or internet) broker may offer access to information, low cost trading, straight through order entry.

How do you charge for your services?

Brokers typically charge a flat fee or a percent of the value of the trade for higher amounts. Your evaluation of this fee should take into account what services the broker offers in addition to trading. Like any commercial arrangement you should make your own decision regarding the value of a broker's service.

Will I receive a regular newsletter or  information on any new sharemarket opportunities?

Most brokers offer emailed or mailed updates on opportunities, regular newsletters with research, and access to the firm's website.

What sort of information can I obtain on your internet site?

Some brokers offer substantial market information on their sites for clients. There may be a cost for this service.

Do you conduct client seminars?

Brokers will sometimes provide seminars and classes on aspects of investing for their clients.

Are you or your firm associated with any of the companies whose investment products are recommended by you?

The broker should always let you know of any conflict of interest or if any association exists.

What research facilities does the firm make use of?

The answer should be either the use of an internal research department, or subscriptions to local and overseas research organisations. Some non advisory firms will not offer research.

How might you review my investment plan and how regularly would you do that? (full service brokers only)

You could expect a quarterly review however this depends on how actively you trade. This could involve reweighting your portfolio and reviewing the overall performance of your shares.

Do I have to set up an account with you before I can trade? How long will this take?

This question is particularly relevant if you want to be able to trade shortly after choosing your broker. Many brokers will require you to set up a client account before you can start trading. This can take up to a week to finalise but can usually be done in 24 hours. Frequently brokers will require that you establish a cash management account with a particular bank or financial institution. The broker is given authority by you to access this account to facilitate easy transfer of funds to pay for your purchase of shares and to allocate proceeds to you from the sale of shares.