Brokers are dime a dozen. Reliability, service fee and research support are some of the criteria to follow while picking your broker
MOST investment products — stocks, non convertible debentures, mutual funds, gold (through exchange-traded funds) — can be bought through an investment trading account. Hence, opening a broking account is a must for anyone looking to invest today. Here are some points you should keep in mind while selecting a broker.
RELIABILITY & PRODUCT OFFERING
Today there is a plethora of brokers available at the nook and corner of every street. Advice, servicing capability and stability should be of prime importance while choosing a broker. You need to understand how reliable has the broker been in good and bad times? Is the past track record of the broker clean? When you sell a share, do you get your payment on the payout day as specified by the exchange? Most brokers provide you with an SMS facility whereby, at the end of the day, you get an SMS confirming your trades as well as the debit or credit position in your account. In addition, you need to check if your broker can offer you the entire basket of products, so that you need not have to go shopping elsewhere. Whether he offers you mutual funds, online IPOs are some of the things you should consider before opening your account.
Online & Offline Platforms
Does your broker provides you with both the platforms for trading? In case you are unable to access the internet or the website of the broker is down on a particular day, is there a reliable call centre, where you could call in and execute your trade.
This is essential, more so for active traders, as positions if left open in a falling market could lead to a terrible loss. If you believe in the offline mode, is the broker's office close to your house? Does he have enough operators to service you and execute your calls on the phone? Will he be able to deliver contract notes or collect/ deliver cheques from your residence, in case you are unable to do so? How many payment gateways does the broker have? If you have a bank account with a nationalised bank which is not empanelled with the broker, would you want to open another bank account to trade with that broker? Having multiple payment gateways is extremely critical as clients do not want to change their bank accounts.
Costs & Fees
There are many brokers who charge as much as Rs 750 for opening your account. While there are several others who offer an account opening facility free of-charge in order to attract customers. However, they may ask you to buy shares worth a small amount of Rs 10,000 within fifteen days of account opening. Along with that, they also offer you a demat account free-of-charge for the first year. Another factor to be considered is the brokerage cost. Most brokers charge you a transaction brokerage, while certain others offer you prepaid cards. So, if you commit an upfront brokerage, then the percentage brokerage that you pay on a per transaction basis reduces.
Some of them provide you stock recommendations through SMS, for which they may charge you a small fee of say Rs 100 per month. Keep costs in mind in the long run.
Portfolio Tracker
There is a lot of technology which goes in creating a good portfolio tracker. It would help if a portfolio tracker combines all asset classes. Also, for tax calculation, it is essential to get your long-term and short term gains right. "Our portfolio tracker helps you create 10 different sub-portfolios. For example, you may want to buy 10 shares of Reliance for the short term, 10 with a 1-year perspective and 10 shares for your retirement that could be created. So, you can create sub-portfolios rather than a single portfolio, which will give you a correct picture of your investments.
Research Support
It is the backbone of a lot of brokers. Check the past recommendations of the brokerage house. Check if it is supported by the institutional desk. Good quality research helps clients take informed decisions. Bigger and reputed brokers have strong research teams, which track a number of companies. Based on this, they do come out with short-term as well as long-term recommendations. Some of them provide model portfolios, which you could replicate. If you are a high net worth individual, you could be assisted with a relationship manager who can monitor your investment needs. There are websites like that of Edelweiss, which create quantitative portfolio baskets for clients, which can be executed with a single click.
