The best UK stockbrokers
Choosing your stockbroker/s is an important decision
There are a lot of brokerages in the UK. Many of these offer great services but sadly many of them are not as slick as they seem.
Stockbrokers and online stockbrokers offer a share dealing service where we buy and sell shares through their company. They connect us to the stock market and by offering this service they take a commission for doing so. This is how they make their money, and so it is in their interest for us to trade as much as possible.
Many online stockbrokers send out alerts on hot stocks and events because they want us to trade. They don’t care if we have an edge or even make money. If we trade – they make money.
If you have ever seen the film “The Wolf of Wall Street” then you will remember that the stockbrokers at Stratton Oakmont wanted their clients to buy as much as possible, regardless of the quality of the company. In the UK, being pitched stocks over the phone will only happen if you open an advisory account – most accounts are execution only (commonly abbreviated as XO).
Whilst I have never come across any stockbrokers as sleazy as this, I have been pitched complete junk stocks in the hope that I will place them a trade and earn them some money. There are genuine stockbrokers out there who build long lasting relationships with clients – just be careful because not all stockbrokers are focused on your own success.
Execution Only (XO) brokers
Hargreaves Lansdown, or HL as it is commonly known, is listed on the UK stock exchange in the FTSE 100 (EPIC: HL.), and therefore everyone is able to see the financial performance and health (solvency) of the company.
Hargreaves Lansdown was founded in 1981 by Peter Hargreaves and Stephen Lansdown, and having been listed since 2007 they are a trusted and established UK stockbroker.
Hargreaves Lansdown is able to offer fill or kill orders, and set up limit orders to both buy and sell. This means that one does not have to be at the desk in order to trade, as we can set the price and number of shares we wish to deal at.
If you want to open a Stocks and Shares ISA with HL, you can do so here.
IG Index is the other big online broker in the UK that I use. They, like HL, are also listed on the UK stock exchange. IG does not offer fill or kill limit orders on market maker only stocks (stocks that are not traded on SETS-mm).
IG offers access to trade SETS stocks as we can place our trades directly onto the order book with direct market access. For frequent traders, that means we can deal up to £9,999 worth of stock for £5, though this does not include Stamp Duty (payable on all Main Market listed shares).
IG Index also has an award-winning spread bet platform which I use regularly.
Full service stockbrokers
A full service stockbroker offers a variety of resources – this can be investment research, access to initial public offerings (IPOs) and equity raises (placings), and telephone dealing. Of course, fees with a full service broker are much higher than those with traditional discount online execution only brokers, and so it is worth making sure you are getting the benefit before routing all of your business through a full service broker.
They can also offer stock at a discount to the current market price in the form of a share placing. This is when a company raises cash for new equity, though very often the price often trades at or below the share placing. It is useful if we want to buy stock in size that we otherwise might not be able to buy at that price in the market.