6 Steps to Choosing a Stockbroker

by | May 23, 2020

Need a stockbroker but don’t know how to choose one?

Here are the steps to choosing a stockbroker.

Don’t know what a stockbroker is? Read What is a Stockbroker

Step 1: Know Your Needs

Different brokers will be able to serve you better depending on your needs.

Here a list of questions you should answer to define yours.

Are you an active or passive investor?

How much do you know about investing?

Do you know what you’re doing and just want to execute trades, or do you need help identifying opportunities?

Do you need resources to further your knowledge?

Will you need access to support, or are you able to learn what you need to by yourself?

Are you happy to execute trades online, or will you want to call a broker to assist you?

Step 2: Figure Out the Fees

You want to lose as little of your investment returns as possible to accounting fees and trading commissions. A small premium may be justifiable if the platform offers features that its cheaper competitors lack, however.

Is there a minimum deposit? This is the amount you need to deposit just to open an account.

Are there any annual or monthly account fees?

Is there a pro or advanced trading platform that you can pay for such as IRESS?

Do trading commissions depend on how often you trade?

Does the broker offer any free or reduced-price trades?

Step 3: How Well Does the Stock Broker Educate Its Clients?

There are so many books and places online to learn about investing but perhaps you want a broker who helps you with this.

What types of educational offerings does the broker provide?

Where does the information come from?

Does the broker offer resources for beginners?

Is there ample analysis for each security? Do they provide third party analysis such as morningstar?

Is there sufficient fundamental data available? Do you have access to 10-year financial history and financial statements?

Step 4: Test the Broker’s Platform

How easy and intuitive is the site or platform to navigate?

For brokers that allow you to open a free account, it may be worth signing up just to test the platform. Even if you’re an advanced trader, and there’s no free way to test the premium tools, you can get a good idea of the quality of a broker just by looking at its basic offering. If there’s nothing in the standard platform that seems promising, it’s unlikely the advanced platform will be worth your time either.

Go through the motions of placing a trade to see how smooth the process is. Pull up multiple quotes for stocks and other securities, and click on every tab to see what kind of data the platform provides. You should also check out any available screeners or other tools provided to help you find investments that meet your criteria.

What types of securities can you trade on the platform? Can you trade international stocks?

Are quotes in real-time or are they delayed?

Can you set up watchlists and alerts?

What kinds of orders can you place?

Does the platform allow paper trading? Paper trading allows you to trade with an imaginary account and money. This is good for beginners to test their strategies.

Does the platform allow backtesting?

Step 5: Ease of Depositing and Withdrawing Funds

How can you deposit money into your brokerage account? Are any fees associated with these options?

How long does it take for deposited funds to settle?

How easy is it to withdraw funds from your brokerage account?

Step 6: Customer Service

Sometimes you just want to speak to a human being rather than a robot.

Is there a number you can call to speak to a human for assistance?

What are the hours of operation for phone lines? Can you call 24/7, or are the phones only staffed during normal business hours?

Does the website have an online chat option for immediate assistance?

What if you have a basic question but don’t want to bug a representative? Is there a searchable FAQ section that answers a wide range of questions?


It seems like a lot but these are the things you need to consider when choosing a broker. Most online brokers will offer similar products and pricing. It might be the little things that make the difference such as whether or not they have a dedicated phone line for support.

Choosing a broker is not permanent. If you find that you don’t like the service they provide you can switch and transfer your holdings to your new broker.

If it all seems like too much you can take recommendations from comparison websites such as Stockbrokers.com in the U.S and Canstar.com.au in Australia. You can find similar websites for your country by searching “broker comparison [your country]”. Take these recommendations with a grain of salt. The websites may receive affiliate sales for referring you to particular brokers.

With this guide, I hope you know what to look for in a broker and the questions you should be asking to make sure they are suited for you.


Submit a Comment

Your email address will not be published. Required fields are marked *

More Articles Like this

What is the Cash Flow Statement?

What is the Cash Flow Statement?

The cash flow statement stands as a vital tool for assessing the profitability and liquidity of a company. It provides valuable insights into the inflows and outflows of cash, offering a comprehensive view of a company's ability to generate and manage its cash...

Sir John Templeton: From Stock Picker to Philanthropist

Sir John Templeton: From Stock Picker to Philanthropist

Sir John Templeton, was called "arguably the greatest global stock picker of the century" by Money Magazine. With his astute investment strategies and an unwavering belief in the power of long-term growth, Templeton achieved phenomenal success throughout his career....

What is The Income Statement?: Exploring Financial Performance

What is The Income Statement?: Exploring Financial Performance

If you've ever wondered how to measure the profitability of a business, then you're in for a treat. Today, we'll delve into the world of financial statements and explore the income statement's numerical secrets using our trusty lemonade stand as an example. Get ready...

Not sure what stocks to invest in?

Download our Free Toolkit for the Value Investor

Steal the ideas of Buffett, Munger and Marks.

Want to know what stocks Buffett, Munger, Ackman and Marks are buying?


This free guide will give you the tools to:


See what stocks fund managers are buying

See what politicians have recently bought

Analyse a company's financials

Screen for potential investments

and value stocks


You have Successfully Subscribed!


Looking for a way to find undervalued stocks?


This free blueprint will take you through the steps of investing in undervalued stocks just like Warren Buffett 


You will learn how to:


Screen for 'Warren Buffett' type stocks.

Analyse a company's history.

Research a company.

Prepare yourself to value a company. 



You have Successfully Subscribed!