Thursday 7 December 2017

Choosing a Broker

Running a DIY portfolio is tough. You have no-one to blame but yourself on your choices of investment (more about that later).

But one area you can tackle fairly simply is minimising the operating costs of the portfolio - by choosing the right share-dealing broker, which can save you hundreds of pounds a year.

Investors Chronicle has produced a useful-looking Broker Comparison Tool to help you think about this aspect of DIY investing. I used to subscribe to IC but I did not find it much use - and developed my own approach, which you see in this blog.

I had a little play with the tool and it suggested iWeb, operated by Halifax Share Dealing. I don't currently use this, so I decided to look a little more closely at their offer on ISAs:
  • No annual admin charge
  • £5 dealing commission
  • No inactivity charges
  • £25 One-off account opening charge
This seems to me to be very competitive: my existing brokers (and I struggle to keep up with the name changes) are:
All of these have an administration charge (quarterly) and higher trading charges. Nevertheless, iWeb has been around for a while, and recently slashed its joining fee from £200 to £25.

This Is Money has a similar tool with a commentary on the strengths and weaknesses of the different brokers. Their view on iWeb:

Who is it good for? iWeb is keenly priced for those looking to regularly buy investment trusts, shares or ETFs thanks to its low £5 dealing fee and the new set-up fee of just £25 is good value. Bear in mind that you do need to pay for fund-dealing here. And also check out Club Finance's Frequent Trader offer.

In summary, iWeb looks quite attractive; but I wonder how sustainable this pricing structure is. Changing brokers typically involves costs, which is a factor to consider - but I might consider using this broker for any new ISA investments in the next tax year.

I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.


  1. I had a play with the Broker Comparison Tool - some of the numbers don't look right...

    iWeb fee is 0.25% and for any standard account over £80,000 will be therefore be capped at £200... this doesn't show up on the scenario I ran - very much less. A Trading Only account of £1m reports a first year platform fee of £25 and an annual fee of £1 thereafter...

    There are usually offers for low cost trading available (e.g. Halifax @ £3.95 per trade once a month) and so my account with Halifax costs me £60 a year (based on 12 trades and an account valuation above the £80,000/£200 threshold).

    One size fits all comparators are rarely correct for all scenarios, however I'm unconvinced of the accuracy of the comparison tool, but happy to be corrected if I'm wrong.

  2. I always find the broker question fascinating, and so far have disagreed with my actual experience versus what they all say! For example with iWeb it is only £5 a trade, but if you do a monthly subscription trade then you can do this with other brokers for £1.50.
    You really have to crank the numbers yourself and work out what will work - not an easy thing!