So, you are finally planning to make your foray into equities and are planning to open your trading account and demat account with a broker. Before you sign up with the broker, you must have clarity on the services that your broker provides. In fact, there are 8 basic services that you must insist that the broker provides to you. These services require a basic effort from your broker’s side but they can go a long way in enhancing your experience as a broking client.
Trading ideas and research calls
If your broker is a discount broker, then you cannot expect research and trading ideas because that is the reason why they charged you a discounted brokerage. But if you are trading with a full-service broker then you must insist on getting trading and investment ideas. You may or may not follow all these ideas in totality but you must insist that your broker gives you a colour of the market, trading levels for the key indices and ideas to make money in stocks. You can also ask your broker to share the performance evaluation of past calls and trading ideas.
Robust online trading platform
Whether you finally intend to trade over the phone or over the internet, you must insist on a robust online trading platform. Your broking platform must offer seamless connectivity with demat and the payment gateway. It must also offer a platform that enables you to place orders and get them executed quickly. The broker must also have a back-up plan in case the trading engine goes down. Internet trading is a lot simpler and gives you a lot more control. Test the robustness of the online trading platform before signing up with the broker.
Back up call-n-trade service
Even with the best of technology investment, machines can at times go wrong. You don’t want to open your trading terminal at 3 pm and realize that orders are not going through. There must be an immediate backup. Check that your broker offers a backup call-n-trade facility wherein you can authenticate yourself and then place orders over the phone. This is a very useful service when the system behaves erratically towards the close of trade or during volatile times.
Portfolio analytics and remedial measures
The nature of the trading and investment business is such that even the smartest of players can end up on the wrong side. Either the market may have become too volatile or there may be a structural shift in certain sectors or you may suddenly realize that your portfolio is running a large mark to market (MTM) loss. Obviously, you don’t want a broker who just washes their hand away. Ensure that the broker has the capacity and intent to give you portfolio analytics and also advise you on how to salvage your loss making positions. That is where that extra bit service from your broker comes in.
Holistic financial planning
Why do you require holistic financial planning from your broker. Remember, trading in equities is never an isolated task. You trade in equities as part of your overall asset allocation. This asset allocation is determined by your financial plan. Ideally, if your broker offers you holistic financial planning then it adds value to both of you. For the broker, your complete relationship for all financial products is at one place. For the investor, you do not worry about hassles of multiple principals. In fact, if your broker gives you financial planning analytics with added use of robotic and artificial intelligence you are going to have a head start in your investments.
Online portfolio service and capital gains calculation
This is something you must insist that your broker provides online. An online portfolio enables you to look at your holdings, your historical profits and your current MTM in one single window. That is a great enabler for decision making. Most brokers enable auto update of your transactions with them. You must also insist on a facility wherein you can upload your trades at other places too. Also it is ideal if your broker provides you with the short term capital gains and long term capital gains statement with speculative income write-offs and carry forwards also dealt with separately. You must actually insist on that!
Competitive brokerage rates and best leverage on intraday trades
You obviously cannot expect your broker to provide all these services at zero cost. Ensure that your broker provides you with brokerage rates that are competitive. This is more applicable in case of intraday trading and options trading where there is huge churn and hence the cost of transacting matters a lot. You must also insist that the broker provide you with best-in-class leverage facility in intraday trading and in futures and options subject to the extant rules.
Services of a relationship manager as a contact point with you
However much the business of broking may get automated, it always adds value to have a human interface with your broker. Most brokers allocate a relationship manager to clients who can be your contact point for all purposes. This person can be a very important link with the broking company and help you to resolve many problems. Also, the relationship manager can be like a guide who can red flag concerns in the market and highlight opportunities to you.
Whether you are about to open a broking account or you already have a broking account, you must insist on the above 8 services as the bare minimum.