In the movie The Wolf of Wall Street, actor Leonardo DiCaprio played the character of a young stockbroker who started from the bottom and made it all the way to top of Wall Street. In the film, you see the actor relying heavily on the telephone to transact with investors. That is not the same world we live in anymore.
Nowadays, investors no longer need to pick up the phone to buy and sell stocks. While one can still talk to an actual stockbroker to discuss investment strategies, and today clients can log into the broker’s platform and execute the trade themselves.
The process sounds so simple, yet it can be overwhelming to someone who’s just started learning how to buy shares. With so many brokers to choose from that require a multitude of documents, new investors may need some guidance to make the process easier. If you’re nodding your head in agreement, then this article is for you.
The Top Stock Brokers in the UK
If you reside in the United Kingdom, here’s a selection of the top stock-brokers. Read on to learn more about the top stockbrokers.
The Top Stockbrokers in the USA
Here’s a short-list of stock broker candidates, it’s time to get to know some of the best brokers in the U.S. Furthermore, we’ll provide the step-by-step process on how to register to an online stock broker.
What is a Stock Broker?
A stock market broker is a usually a professional individual who performs the buying and selling of stocks on behalf of traders or investors. A stockbroker can go by other names such as a broker, a financial adviser, an investment adviser, or a registered representative. Stock brokers work for a brokerage firm such as a hedge fund, online stock broker, or a family shop.
Many brokers begin as an intern of a firm and gain hands-on experience through many years of exposure in the financial exchange market. In the US, before they can buy and sell securities, brokers must first pass the General Securities Representative Qualification Examination, which is commonly referred to as the Series 7 exam. The exam is given by the Financial Regulatory Authority (FINRA).
After passing the exam, the broker is becomes licensed to buy and sell stocks on behalf of investors and traders. However, getting clients is a different challenge. They must display a deep understanding of the stock exchange market, financial services and must prove to investors that they possess the skills to grow their capital. This is why the best stock broker is often given the privilege to manage the accounts of large financial institutions.
Stockbrokers charge a certain fee for their services. They receive a commission whenever a client buys or sells a stock or security. They can also receive compensation for an excellent performance. Bonuses depend on the company they work for, as well as individual performance.
How to Choose Your Stock Broker
If you’re looking to invest and you have capital on hand, the next step for you is to find a stock broker. With technological advancements, there are now hundreds of online platforms to choose from. To help you find the best online stock broker that suits your needs and preferences, we’ve put together a list of qualities that you should look for.
Broker Must Meet Your Investing Needs
The first and most important thing is that the broker must cater to your online stock investing requirements.
For instance, if you’re new to stock market investing, you might want to sign-up to a platform that offers educational resources for new investors. You want to prioritize brokers that provide tools and guidance, such as glossaries and customer-centric staff that can help make your experience simpler. These resources should also provide information on the types of investments available on the platform.
There are also some brokers who allow clients to perform practice trades. This is done so that clients can get a feel for how the market and the platform interface works.
If you already have experience investing and know how the stock exchange market works, then perhaps you’d prefer a broker that provides high-level reports that contain in-depth research on select securities. These reports often cater to two types of audiences: the technical investor and the fundamental investor. More importantly, they should be prepared by seasoned analysts.
If you want to be a trader, maybe you need a broker that provides advanced tools such as charts with features that enable you to buy and sell a stock at your preferred price. Many penny-stock brokers offer these features.
Your other investing needs may be the types of securities the broker offers and in what markets or stock exchanges. For example, you may want access to the largest stock exchanges globally or only a specific exchange. Or maybe a broker that also offers mutual funds, stock options, bonds, or other securities. Whatever your investment needs are, make sure the stock broker you choose has what you require.
Costs and Fees
Once you find brokers that match your needs, the next step is to narrow them down by looking at their costs and fees. Broker fees can vary according to the broker’s policy. Some brokers have fixed fees while others charge based on your trading frequency or the size of your account.
Another thing to look out for is the withdrawal fee. On top of that, there are some brokers that won’t allow you to withdraw your funds if your account balance goes below a certain threshold.
Lastly, there are some brokers who waive trading fees up to a certain number to attract new clients. For instance, Merrill Edge offers free 300 stock and ETF trades.
These maybe minute details but it is best to be aware of them. Consider speaking to a customer representative to clarify their firm’s costs and fees before signing-up.
You further narrow down your list of potential brokers by finding out if they require a minimum deposit to open an account. Many brokers require their clients to deposit anywhere from $500 to $1,000 minimum. However, there are also brokers that do not require an account minimum. Popular brokers that fall under this category are TD Ameritrade, Merrill Edge, and Ally Invest.
Association with Trusted Bodies
One of the disadvantages of dealing with an online entity is that you can never be too sure. We recommend that you take certain precautions to protect your capital, including:
- If you’re in the US, find out if the broker is a member of the Securities Investor Protection Corporation (SIPC). Legitimate firms advertise their SIPC membership at the bottom of their company’s website. If you still have doubts, you can always refer to the SIPC website.
- In addition to the SIPC, also check if the brokerage firm is a member of FINRA. You should be able to see in the footer of their website as well. If you can’t find it, you can verify membership through the FINRA BrokerCheck website.
Regulatory body membership provides you with some security. For instance, if the brokerage firm goes under, clients of SIPC members are entitled to insurance of $500,000. This means that your funds are protected in case your broker files for bankruptcy.
The last factor to consider is account security. Get to know the security options that the broker offers.
For instance, it is now becoming commonplace for online brokers and many other web services to recommend that their clients use two-factor authentication (2FA). It is a security feature on top of your password. The 2FA often involves receiving unique codes through email or text in order to sign in to your account. However, many people prefer to use an app such as Google Authenticator.
These are some of the most important criteria that can help you find the best online stock broker.
How to Sign Up in USA
The first step is to head to the website of your preferred broker for stock trading. You will see a button that says “open an account” or “open a new account.” Click on that button to kickstart the broker sign up process.
To open an account, you’ll need to the following documents:
- Completed application form (provided on the website).
- Social Security Number (SSN) on Individual Taxpayer Identification Number (ITIN).
- Foreign tax ID, visa number, passport for applicants who are not permanent U.S. residents or not citizens.
- Company name and address, if applicable.
The application form requires your personal information such as name, address, email address, and citizenship status. On top of that, you might be asked to indicate your goals or investment style and whether you are new to investing or not.
After you provide the required details, the broker will ask you to agree to their terms and create your login credentials. That’s it. You’re now set to work with the best online stock broker.
How to Sign Up in UK
The broker registration process is more or less the same as with U.S. brokers. However, there are some differences in the requirements when it comes to UK stock brokers.
- As always, the first step is to head to the best UK online stock broker and click on the “open an account” button. You’ll be asked to provide your email address, preferred username, and password. The online stock broker will then send an email to verify your address.
- Verify your email address to continue the sign-up process to, hopefully, the best online stock broker in the UK. You’ll be taken to a page where you have to provide your first name and surname as they appear on your passport. You’ll be required to provide a valid ID to confirm your identity.
- After that, you’ll have to provide your address and mobile number. The UK stock broker will confirm the number you provided by sending you a unique code. Lastly, you’ll have to agree to their legal agreements.
Once you complete this process, you are ready to buy stocks.
Finding the right stock market broker can be a daunting process. This is why we put together this article about the best online stockbrokers for beginners. On top of that, we provided the step-by-step registration process guides for both U.S. and U.K. investors. We wish you luck in growing your net worth and capital through your investments.