Need an advisory broker

nick111 on 29/11/2014 - 10:40

Hi all

I was looking for an advisory broker so I can invest some of my savings around $25k. I have basic knowledge about shares but considering the amount I thought advice from a broker could be worth.

ASX has listed a few brokers who provide advice, was wondering if anyone can share their experience with an advisory broker or recommend any brokers for advice.

I am currently earning interest on the savings but thought shares might be a good long term investment.

I am only keen on some of the top stocks i.e. banks, mining companies etc. so not sure if I should still get advice or go with an online broker account.

Thanks

Financial

Comments

  • mskeggs on 29/11/2014 - 14:26
    +1

    I believe advisory brokers are worthless*.
    Please consider buying a subscription to money magazine or similar to start your own financial education. It is not something you can reasonably outsource without the high risk of poor outcomes.
    If you do not have the basic knowledge, then the advice an advisor gives can't be properly assessed, and you ultimately need to make the decision.
    Should you want to get sharemarket exposure, consider index funds/ETFs that track the Dow Jones, All Ords, NASDAQ etc. They perform in line with the index they track, offer low fees, and have historically outperformed comparable "managed" investments. These investments would achieve your objective of exposure to top "blue chip" shares with little costs and admin.

    *advisory brokers can get preferential access to IPO investments. At $25k this does not apply to you as they would only ever call if they have a dog to off load. When you have multiple millions, consider having accounts with advisory brokers for this IPO access.

    • adamren on 29/11/2014 - 15:56

      Edit: oops hit reply and was going to say I agree but wrote my opinion instead and didn't realise I was still in reply mode. + voted anyways.

  • adamren on 29/11/2014 - 16:06

    For $25k you'll end up paying nearly $5k for the 'advice'.

    Most advisers/brokers barely do better than the market, certainly after fees, heck too many lose you money in the sense you're not gaining as much as you could and they're charging you for bad performance. Far better off investing that $5k in yourself, teach yourself the basics and move on to intermediate stuff and how not to lose your initial capital.

    Brokers are so called because they make your more broke than you were! ;-p OK…dad joke.

    As MsKeggs said, better off going with an index. Again most brokers barely beat the market. Only the top 10% do it consistently. And they're not going to be cheap.

    Like a casino, the odds are stacked against you and they've got it rigged to win more than us. It's not a true casino but at times can be pretty close, especially with derivatives and complicated stuff like options and CFDs.

    Consider it your education fund in investments and markets. Find what you like and stick to it. I like Forex right now but it's very risky and can be pretty volatile sometimes.

    So keep your costs low and DIY.

    • mskeggs on 29/11/2014 - 17:15

      Just to clarify adamren's comment, an advisory broker is different to a financial advisor. The broker is a specialist share trader who can "advise" which stocks meet your particular objectives. They don't charge separately for this advise, but charge a higher brokerage fee (circa $100/trade and/or a percentage) for the personal touch.
      These brokers don't beat the market, they play a role similar to a bank teller in terms of being able to advise which product is most suitable (e.g. a teller might be able to talk about term deposits etc., a broker can advise which stocks).
      As I noted in my footnote, the good ones can look out for you and tip you in to opportunities like IPOs or other opportunities where, for example, their research team has uncovered a good value stock. They can also give you access to this research, which is good to have, but far from perfect in predicting stock price movements.
      For example, I have a cash management account with Macquarie Bank and get access to their research a few days after it is released to their broking team. If I paid the extra brokerage to transact share purchases through them my broker would theoretically give me early access to that research too. Note execution-only (non-advisory) brokers typically have research analysts too. So having a few accounts is useful to get a view of different analysts views.

      The investment managers who beat the market, or fail to, run investment funds (called mutuals in the USA, managed funds here).
      It is very rare for these guys to consistently beat the market, typically the top dogs this year will have bad years next time.

      And they will charge you >1% in fees to look after your money. I reiterate the tip to investigate index funds/ETFs. If you need a name to Google, Vanguard are reputable.

  • adamren on 29/11/2014 - 18:28

    Yes, best to just DIY. It's a fun (albeit expensive at first) hobby to have. Keeps you up to date with the world and learn how it works. A little understanding of the economy wouldn't hurt anyone.

    The access to research can be handy but not really worth the extra fees nuisance of them hassling you to buy more. Unless you just buy once a year to satisfy being an active client and worthy of receiving their updates etc. Oh and screen your calls or just tell them you're not interested each time.

    Some traders will trade the bare minimum they can just to access the research but it's far better to find your own data and formulate your own trades from that. As with fund performance, research is hit and miss also. It's basically professional stock tips that you pay for. Though independent ones like The Intelligent Investor is pretty good.

    Teach yourself critical thinking and read up on contrarian trading philosophy. The stunning leveraged billion Euro bet in 1992 against the BoE by George Soros is a brilliant example.

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