1. Broker Basics: Understanding the Role of Brokers

Bryce: [00:01:12] Welcome to Get Started Investing feed, a podcast giving you all the basics. You need to feel confident on your investing journey. There is no jargon and no B.S.. Over these next three episodes, we're going to be doing a broker basics with superhero. We've crowdsourced your questions from the Equity Mates community and we've included some of our own. We'll be covering the fundamentals of brokers, choosing the right broker for you, managing a trade and managing your portfolio. This is going to be your one stop shop for all of your broker questions. So we have brought in an expert from superhero to help us all through it. But as always and firstly, I am joined by my equity buddy Ren. How's it going, bro? [00:01:51][39.2]

Alec: [00:01:51] I'm very good, Bryce. I'm looking forward to this series. We get a lot of questions here at Equity Mates, but no one with a bullet is what broker should I sign up with? And so I think this series is going to be a great way to help people understand what a broker is and how to make that choice. [00:02:09][17.3]

Bryce: [00:02:09] It can be very daunting. There are a lot of options out there at the moment, new ones coming to town, obviously some old ones that are still sticking around and may be very confusing. But to help us all through this, we are joined by the founder and CEO of superhero John Winters. Welcome. [00:02:26][16.4]

John: [00:02:26] Thanks for having me. [00:02:27][0.6]

Alec: [00:02:28] I think one of those new ones that Bryce has mentioned, one of the new ones making the old ones very nervous, [00:02:34][6.3]

John: [00:02:36] fresh to market, fresh to market. I think it's a I think it's a great opportunity to to talk on this series because so many people can even come to me still saying, you know what, what's the difference? What broker should I use? The onboarding process is so confusing. Who do I choose? What's a different you know, it's all the same questions from so many people. So, yeah, hopefully we can clear some of those things up. [00:02:58][21.8]

Bryce: [00:02:58] We don't believe that choosing a broker should be the first barrier to investing, which we will touch on in a little bit. But I think the idea for these three episodes is to really give you the confidence to choose a broker that is right for you. So we'll be walking through, as we said, what are the fundamentals of brokers in this episode? You know, what is a broker and where they fit into the financial landscape, how brokers have changed over the years, gone to the old school days of the Wall Street, sort of throwing paper bits of paper around. Well, I don't know, John. Maybe it does still exist, the basics of opening and operating a brokerage account. And then we'll finish with a chat on our broker's safe, which I think is a very sort of important question to touch on is a lot of people have that consideration in the back of their mind, you know, putting money that they've saved for for a while into, I guess, something that is very new and unknown. So I guess to kick [00:03:52][53.7]

Alec: [00:03:52] it off, yeah, let's start at the very beginning. John, what is a broker? [00:03:57][4.8]

John: [00:03:58] Great question. So a broker is really the facilitator of your investment. So if you wanted to place a trade, if you wanted to buy some shares, you can't go to Wall Street and knock on the door and say, hey, I want to buy some shares. [00:04:13][14.7]

Speaker 4: [00:04:13] That's what I've been doing. You can go down [00:04:16][2.4]

John: [00:04:16] to bridge straight to the ASX. Those are the exchanges. And you need a broker who facilitates your relationship between you as an investor and the exchange. So a broker is really that sort of intermediary that you require. They are the ones that you give your order to, whether you're picking up the phone and speaking to someone or you're going online, signing up and putting an order into into a website. The the broker is the one who's facilitating the transfer of shares, the transfer of money, the placing the trades into the market, that they're the guys who are actually doing all of the work in the background to make sure that you end up with with your, you know, 100, 200 dollars worth of, you know, 2000 dollars worth of BHP shares and that they are taking the money off you to to pay for those shares. [00:05:02][45.8]

Alec: [00:05:02] Yeah, the the brokers, basically your agent, you tell them what to do, then they go out and do it for you. [00:05:07][4.8]

John: [00:05:07] Yeah. Yeah, exactly. I mean, it is it is sort of like a real estate agent from from in some respects you can buy and sell a house without one, but it shares you have to have a broker. That that's just how that's just how it works. [00:05:22][14.9]

Alec: [00:05:22] Yeah. So you you just touched on that. But I'm going to ask you explicitly, do you need a broker? [00:05:28][5.5]

John: [00:05:29] Yes, you do. Yeah. So a broker is a regulated financial services provider. So they they are the the only sort of the only conduit into the exchange that the only way that you can buy and sell shares unless you are doing a transfer from your mum and dad or or to your mum and dad or to your kids or something, there's there's ways that you can transfer shares. But if you want to go into the market and buy buy shares, you have to do it through a broker. [00:05:58][28.8]

Alec: [00:05:58] Yeah. Yeah. They're matchmakers. You can't just call Goldman Sachs off and be like, do you have any shares you want to sell me? [00:06:04][5.6]

Speaker 4: [00:06:05] Or you could give it a shot. [00:06:05][0.5]

Bryce: [00:06:08] So the landscape for brokers within Australia and obviously all around the world, but we'll focus here in Australia has has changed. You used to be a stock broker, John. So you've got experience in this space and you've seen the transition arm. And back when I started investing and my parents were investing, it was, you know, the traditional call up someone and say that I want BHP or CBA and they would execute the trades. And now we've got the likes of superhero where it's high tech platform, cheap trades. So the the the change has been quite significant. I have to sort of talk us through how the brokers have changed and maybe what they offer them and what the differences are. [00:06:52][43.6]

John: [00:06:52] Well, I started my my career in financial services and broking back in 2007, and we're still filling in paper for paper tickets that you'd go in hand to the to the debtors who are the guys who actually put orders into the market. And and that that was really the the start. It was, you know, you sort of the junior of the office and you do data entry and you fold. We were folding contract notes and putting them in envelopes and things that that's and and, you know, talking to to my parents, though, they were sort of well. Back in their day, you went from a choky where you were riding up share price on a chalkboard [00:07:26][33.8]

Speaker 4: [00:07:28] through to like a glossy shoki. [00:07:31][2.7]

John: [00:07:32] Yes. And then and then you'd move through to becoming a broker. So that was that was the beginning of my journey. Paper tickets. And that was in 2007, just before the GFC, which [00:07:41][9.1]

Alec: [00:07:42] really wasn't that long ago. [00:07:43][1.1]

John: [00:07:43] No, it's surprising when you look back, online broking did start in the late in the late 90s. And CommSec was sort of the first major cab off the rank on the on the the online share trading scene. But, yeah, things things have changed. I guess the the key thing is you get to to trade with a broker, you're either picking up the phone and talking to someone and the person at the other end of the phone is, is typing your order into to their system, which is then getting pushed into the market or you're using online. You're doing it yourself and you are putting the order in yourself. And and that online platform is then putting the order into the market automatically. So. So this there is a difference between between, you know, how you can do it. But, yeah, the change in technology that we're saying is is moving at lightning pace now. [00:08:35][52.1]

Alec: [00:08:36] Now there's probably two key differences between the old school. Pick up the phone and talk to someone and, you know, the online way of doing it. I guess the first one is you're actually speaking to a real person with the the old school way of doing it. And I guess they can you know, they can be trading sharply and say, are you sure you want to put that trade on? That might not be a good idea, whereas when you're doing it online, it's a free for all. But probably the biggest change is the cost. And, you know, super hero has come to the market. They offer five dollar brokerage. So any time you want to buy or sell a share, it's five bucks. Cheapest in the market is free for ETFs. Again, cheapest in the market. Can't get much cheaper than that until you start paying me to buy it. [00:09:24][47.6]

John: [00:09:25] Is there something wrong then? [00:09:27][2.0]

Alec: [00:09:28] Can we put that in context for five dollar brokerage for super hero? A bit more expensive, but still cheap for a lot of the other online brokers. How does that compare to a full service? Pick up the phone and call someone broker? Yeah. [00:09:41][12.8]

John: [00:09:42] So a full service broker where you pick up the phone, you're having a chat and you're either getting advice or you're not getting advice. The rack rate is one per cent of the value of the trade. Or 125 Dollars, that's 125 Dollars as a minimum. Yeah. Then then you've got the online guys who who and that that the the the old school breaking way, you know, that that is the recruits. If you did significant volume, you might get that down to five percent. You still got that 125 minimum. I think that's pretty, pretty standard across the industry. But when you look at the online guys, you've got anything from where we are, where we go from free or flat, five dollars per trade for shares. You can you can get Gosu at nine point fifty nineteen ninety five plus some some a have a percentage scale as well. So it really you sort of get to do your homework a little bit. But there is a huge difference in in price between picking up the phone and speaking to someone and doing it yourself online. Yeah. And at the end of the day you're buying the same shirt. [00:10:49][67.6]

Alec: [00:10:49] Yeah, exactly. That's the biggest thing. It's the same shares. And if you are spending one hundred and twenty five bucks to put a thousand dollars into Woolworths shares, you already, you know, over 10 percent down, 12 percent down. You got to make that money back. [00:11:03][13.4]

Bryce: [00:11:03] Yeah, 125 bucks. What's that, 25 trades on superhero for five bucks. Yes. I guess the question that comes to mind for a lot of our listeners then and this is a question that has come through from one of the listeners, is, you know, if something is more expensive, it's perceived as, I guess, better quality, maybe more value. Is that the way to look at brokers these days? And I guess the direct question is, what can I expect from a higher fee broker? [00:11:29][25.4]

John: [00:11:30] Yeah, there's not a huge amount of difference they pay. The full service broking model is really based around advice. So that's that's how they sort of command the higher a higher price. At the end of the day, if you call if you call a full service broker and say buy me two thousand dollars worth of Afterpay shares. Or you go to superheroine and you put in an order for 2000, you're getting the same shares. Yeah, it's exactly the same thing. You just getting charged a different price. And you called them and said, I want to do this. So there's no advice in that in that instance. So there's not a huge amount of difference with the end product. There is a huge amount of difference with the price. Yeah. And then if you look at the online guys, there's no difference between the shares you buying through Comsec to self worth to superhero. They're the same shares. There is a price difference though. So that's that personal preference which one you choose. And we'll talk about that as we go. But they the end result is the shares that you're buying. Yeah. And they're all the same. [00:12:37][66.8]

Alec: [00:12:37] Yeah, they're all the same. And I guess a common question we get is the different brokers offer different shares. [00:12:43][6.3]

John: [00:12:45] You get some brokers that offer access to different markets. But most brokers offer look like we have all of the shares and ETFs on the on the Aussie market, and that would be pretty standard across any broker that offers an Aussie. [00:13:01][15.9]

Bryce: [00:13:02] We really feel like we're just going to do that. [00:13:03][1.2]

Alec: [00:13:04] Well, I think it makes sense. You know, like if you think of analogy of like retailers, different online retailers offer different things. But with the stock market, all brokers that offer access to the Australian market offer access to the same Australian shares at the prices of the same. You know, we've [00:13:24][19.4]

John: [00:13:24] only we've only got this two exchanges, the TSX and checks. [00:13:28][4.0]

Alec: [00:13:29] But I don't forget the NSX. [00:13:30][1.0]

Speaker 4: [00:13:31] Yeah. [00:13:31][0.0]

Alec: [00:13:32] Often forgotten Australian Stock Exchange. [00:13:34][2.0]

Speaker 4: [00:13:34] Yeah, it's right. It's highly liquid, a lot of activity because a [00:13:39][5.2]

John: [00:13:40] couple of others popping popping up in the Sydney Stock Exchange [00:13:43][3.0]

Bryce: [00:13:43] seem to be the Equity Mates stock exchange. [00:13:44][1.3]

Speaker 4: [00:13:45] Not exactly sure what they do, but [00:13:48][2.7]

John: [00:13:49] yeah, the prices that you get in Australia are the price like this standard pricing. So the US this. There's a lot of different exchanges, and depending on which exchange you trade into, there could be a different price, that that's not the case in Australia. It's all the same price, all the same shares. [00:14:06][17.1]

Bryce: [00:14:07] So we've unpacked what a broker is, it's the facilitator between you in the market making the trade possible, can't go and knock on the door of Woolworths and ask for some stock. And we've understood that, you know, there are a number of different types of brokers. You've got your full service on one end, generally very expensive and sort of play in the advice space through to the banks. And then also this online approach now that a lot of the like the likes of superhero offering, I guess then the next part is where the brokers fit in the financial sort of landscape, because a lot of our listeners, I guess, when they're searching for brokers, they'll come across names such as Computershare or, you know, Comsec Pocket. And I guess if you can help us articulate where brokers sit with relationship to all of those different businesses. [00:15:00][52.8]

John: [00:15:01] Yeah, sure. So you've got a few different sort of structures across the investment landscape. So you've got the the saving you've got a savings account, which is, you know, typically a bank account that you can you can earn [00:15:11][10.5]

Speaker 4: [00:15:12] no interest, no interest on cash is king. Yeah. [00:15:18][5.6]

John: [00:15:19] Yeah, that's true. I tell you an interesting story about that as well. They then then you've got the micro investing guys, which is quasi saving, quasi investing, where you're investing small amounts into a managed fund and getting exposure to the broad market sectors. [00:15:37][18.4]

Alec: [00:15:38] And for people who aren't familiar with the term micro investing, it's companies like Re's or Comsec Pocket where they can put a few cents in and they'll pull that with everyone else's money and invest it. Yeah. [00:15:50][12.2]

John: [00:15:51] And then and then you've got brokers, so. The full service, the online guys, in terms of Computershare and Lincoln, if you've bought shares, you will have certainly [00:16:01][10.1]

Speaker 4: [00:16:03] they got a bunch of a [00:16:05][1.9]

John: [00:16:05] bunch of letters in the mail. So those are really service providers that sit between shareholders and and actual companies that you own shares in. And they handle the share registry. So when you become a shareholder, they send you a welcome letter. You can't get email that apparently you have to get solitary in the mail every month. They'll also send you a holding statement at the end of each month to tell you to remind you how many shares you've [00:16:34][28.6]

Alec: [00:16:34] got, because you can't say that online. [00:16:35][1.2]

John: [00:16:37] So you can log in and say it, but they still need to send you the trick. So they are they are really a service provider to the industry. And and then you've got you've got ETF providers as well. So ETF provider is or an issue is a company like Vanguard Beta shares ETF Securities Fennec. So those guys create ETFs. They create a single security on the market that invests in a range of different shares. Usually that follows an index, whether it's the Nasdaq or or the ASX 200, and you buy a single share and you get exposure to a range of different shares. If you bought one of those, Computershare or Link is still sending you a. Yeah, so it's in the paperwork, so. And you've got to buy those, you've got to buy those ETFs through a broker. [00:17:31][53.8]

Bryce: [00:17:32] Third policy here at Equity Mates is that we hate paperwork. [00:17:34][2.2]

Alec: [00:17:35] So I think for people who aren't too familiar with all those different terms and may have got a bit lost in all those different, you know, parts of the market. So let me let me summarise it. Tell me if I've got it or not. So you've got the normal bank savings account and micro investing really help you get your money sorted, save money, but you can't buy individual shares with those brokers are the part of the market where you can actually put an order in and buy shares that the only place in the market where you can actually go and buy shares. Yep. Then you have companies out there like Vanguard and Beta shares that are making products that we can invest in. So through a broker. Through a broker. Yes. So you could throw a broker, you could buy shares or you could buy some of these other investment products that are being created by the likes of Vanguard and Beta shares. And then once you buy, you then have the likes of link markets, Computershare boardroom, who then manage your relationship as a shareholder in the company, as a part owner of the company with that company. So the company doesn't have to manage millions of shareholders themselves. [00:18:42][67.2]

John: [00:18:43] They outsource that. [00:18:44][0.7]

Alec: [00:18:44] And throughout all that ecosystem, I guess you could call it, brokers are the only ones that you can buy shares. You can't go to beta shares or Vanguard and say, you know, I want to buy shares of CommBank. You can't go to border and media and say you manage the relationship with CommBank. I want some shares, its brokers that facilitate that access. Yeah, yeah. [00:19:04][20.6]

Bryce: [00:19:05] Nicely summarised it. So, John, let's turn our attention to, I guess, the rules and regulations around brokers, because I think it's an important thing to understand. Yep. I guess basically, are there rules that you guys need to follow? To make it possible for us to buy stocks through you, absolutely. [00:19:29][23.3]

John: [00:19:30] So the the movies that you say that will follow those. Exactly. [00:19:35][5.3]

Alec: [00:19:36] And that's based on superheroes. [00:19:37][1.0]

Speaker 4: [00:19:38] I've never I've [00:19:40][1.2]

John: [00:19:40] actually never seen any of that stuff happen throughout my career. So, no, we didn't have that. [00:19:48][7.6]

Speaker 4: [00:19:48] Superheroes. The hottest with midget throwing. [00:19:51][3.0]

John: [00:19:51] And so so, yeah, there's a huge amount of rules and regulations. So ASIC, ASIC regulates the sector and the capital requirements, the ASX market rules. And there's there's rules that way as a broker have to ensure our clients are following as well. So there's people who have come onto the platform asking why they can't, you know, put a buy order on at a price significantly higher than the current price. There's market rules, market integrity rules that that are in place to make sure. You know, things don't go to Tik-tok that [00:20:32][40.5]

Alec: [00:20:32] Bryce keeps trying to inflate the price of Afterpay by trying to buy one share at ten thousand [00:20:36][4.1]

Speaker 4: [00:20:37] dollars. I put in a lot of Biota's. [00:20:39][2.2]

John: [00:20:44] Yeah, but there's you know, there's there's there are people who do try and manipulate the market and and there's rules or regulations in place. And and a lot of those rules are enforced by the broker. So and if the broker does put in a trade that that is seen to to manipulate the market, even though we're just the facilitator and pushing an automated order through that, those those requirements do fall on our shoulders. So there's there's a huge there's a huge range of rules and regulations to ensure that everyone's money is safe. [00:21:17][33.8]

Bryce: [00:21:18] So from the point of inception, you know, the idea of superhero for yourself to the point of launch, can you give us an idea of the period of time it took to actually cross the T's, dot the I's? From a regulatory point of view, [00:21:31][12.6]

John: [00:21:32] what took us took us about two and a half years to get it up off of the ground. So I licencing ASX relationships, market participant relationships is a huge there's a huge amount of work that's gone on in the background. And you and you just have to do it. You can't you can't go to market without the regulatory structures in place because you just get shot down straight away. There's no way around it. Yeah. And there's a huge amount of red tape in Australia, as everyone knows. And and I think that going through that process, I do believe that a lot of that red tape is good and it's there to protect everyone. [00:22:10][38.0]

Bryce: [00:22:10] Yeah. So I just want to make this distinction or trying to elaborate on that a little, because we do have you know, and this relates back to the price discussion earlier. Just because you're offering a lower price relative to some of the larger brokers doesn't mean there's something dodgy going on from a regulatory point of view or the products that you're offering. You know, some people say how is it possible that's such a low brokerage for these online platforms? It must be, you know, skirting around somewhere, but it's impossible to do that. [00:22:41][30.7]

John: [00:22:41] No, it is it is impossible to do that in the same in the same conversation came up when CommSec launched and they were 20 bucks to trade and everyone else is charging two and a half per cent back then. So how are they doing it so cheap? And it's just the efficiencies that you can get through using tech and not having to have people at the other end of the phone talking, talking and taking an hour to talk about waste by bad. [00:23:04][22.5]

Alec: [00:23:04] Yeah, I mean, the answer could be look at how much stockbrokers might. Yeah. [00:23:10][5.7]

Speaker 4: [00:23:10] That's why we can charge so much less. [00:23:12][1.7]

Alec: [00:23:15] So I think at this point we've sort of touched on what brokers are, where they fit into the landscape, what they do. I guess we've touched on the rules, but maybe the the next question is, you know, in terms of our brokers regulated, but more importantly, are they safe? You obviously will play by the same rules. But if you put your money with a broker, how do you know that that money is safe? I guess. [00:23:46][30.8]

John: [00:23:47] Yeah, good question. So the broker being the facilitator is not does not have ownership over your shares. You know, you've always got the ownership and your cash sits in an Australian regulated bank account and the stock is held ultimately by the ASX on that system. So, you know, I think in terms of asset security, there's not a huge difference between between brokers and, again, those those rules and regulations that are in place to make sure that that everyone is following the rules. And and there's and there's regular conversations that happen with the regulators across the industry, some some more than others. Usually, you know, the big banks are sort of, you know, the the key the key culprits. And I think I think it's just because their businesses, their businesses are so extensive, but there's not a huge amount of difference in in the different structures for from a safety point of view. [00:24:45][58.4]

Bryce: [00:24:46] Hmm, I think it's important to just remember that the same rules and regulations that apply to your bank account is going to Covid you here in this, you know, when you're putting money into your broker. I mean, it's not too much to worry about from a safety point of view. And we'll touch on the chest versus custodian bit later on in another episode. But I think at the highest level. [00:25:07][20.9]

Alec: [00:25:08] Yeah, safe. Yeah. Don't think it's like, you know, the fact that you hold physical gold in your hand is safer than this system [00:25:17][8.8]

John: [00:25:17] because you cash under your mattress. [00:25:18][0.9]

Speaker 4: [00:25:18] Yeah. Well, like I said, [00:25:20][1.8]

Alec: [00:25:21] there's so much regulation around this and. Yeah. [00:25:25][3.3]

John: [00:25:25] Yeah. And you know, you know, you're not transferring your cash to some dodgy south east south east Asian country. [00:25:31][5.7]

Speaker 4: [00:25:31] Well, it's Australia [00:25:32][0.9]

Alec: [00:25:33] when you tried to help that Phillipine billion. [00:25:36][2.4]

Speaker 4: [00:25:37] But other than that, when I won that eighty five million in a British British lottery, I want to know why I'm still waiting on that. And I've got money in my bank accounts. [00:25:47][9.8]

Bryce: [00:25:50] So to close out, I think this episode, you know, it's probably worth touching on opening a brokerage account. I actually don't know what the process would have been like back in the day. I know there's a lot of [00:26:03][13.2]

Alec: [00:26:03] paperwork, much [00:26:04][1.1]

Speaker 4: [00:26:05] paperwork, kind of [00:26:06][1.0]

Alec: [00:26:06] like drive like private funds these days. The amount of truly unbelievable. That's just going to be my guess. [00:26:12][6.3]

Bryce: [00:26:13] Yeah, let's not even mention trying to set up an international [00:26:15][2.0]

Speaker 4: [00:26:16] accounts, but [00:26:17][0.6]

Bryce: [00:26:18] nowadays it's a lot easier in a matter of minutes, I assume. [00:26:21][3.1]

John: [00:26:22] Well, that was that was one of the key things. When we were starting superheros, it was taking so long to get an account at a full service broker set up. It was an eight page account form you had to send to a financial services God product disclosure statement. Then you go down to the chemist and you get your day set to post it all back to the office. And then a couple of days later, we'll get an account set up. In a couple of days later, you can try it and you've [00:26:45][23.1]

Bryce: [00:26:45] missed the stock that you [00:26:47][1.3]

Speaker 4: [00:26:47] just want to try to do [00:26:48][0.8]

John: [00:26:49] so. So and and I can't speak for all of the online guys, but with Superieure, you can sign up in a matter of minutes. We go through full email verification on the way in, [00:26:59][9.8]

Bryce: [00:26:59] which is anti money [00:27:00][0.8]

John: [00:27:00] laundering and anti money laundering, counterterrorism, terrorism financing. There's a whole range of regulation around it. And the the process is pretty frictionless. You can be set up in a matter of minutes and you can you can transfer money into your account and you can trade now with us and a number of the online guys. You do need to have money in your account before you can trade. But it's a matter of getting that account set up first. Yeah, so that that's that that's the case. [00:27:32][32.0]

Bryce: [00:27:33] And just to be clear on that bit of the process, you can transfer your money from your bank account and then it sits in, I guess, a cash account within your brokerage platform that you can then pull on when you want to buy. You don't have to, I guess, transfer and buy straight away. You can just have it sitting. [00:27:51][18.6]

John: [00:27:52] You can hold your cash there. You can transfer your cash back out. So it's all pretty, pretty easy through [00:27:56][4.5]

Alec: [00:27:57] one of one of my best savings tips. Well, one of the things that I do in my, like, personal savings is I when I get paid, I transfer some of that money straightaway into a brokerage account. I don't know what I'm going to buy. I don't you know, so sometimes I do. But a lot of the time it's about just getting that cash out of my spending account and into an account that is ready to go. And it's taught. That's why [00:28:19][21.9]

Bryce: [00:28:19] you have to bother with household items for food [00:28:21][1.6]

Speaker 4: [00:28:21] because, you know, liquidity. [00:28:22][0.8]

Alec: [00:28:24] I would rather have liquidity in my brokerage account that in most men. [00:28:27][3.2]

Bryce: [00:28:30] Are there any other processes or things that you should know when it comes to setting up a brokerage account? [00:28:35][5.3]

John: [00:28:36] And I think that the key sort of hurdle is going to be that that of verification. So whether it's with with superhero or another broker, that's going to be the critical piece that is that is regulated by AUSTRAC, that's not regulated by ASIC. So there's there's a huge amount of rules and regulations you have to go through. So, you know, keep you keep your ID handy because you're going to need that on the way in. But once you set up, it's it's you know, it's pretty, pretty easy from there. You're just going to transfer money and you obviously need to know what you're going to invest in. But that set up process can be very simple, depending on who you go to. [00:29:15][38.6]

Alec: [00:29:15] Yeah, I think the best analogy for people who haven't set up an account before, I guess it's kind of like setting up I like online shopping account or it's probably a better analogy. Might be like a sports betting account where they have to do a verification as well. And so, you know, it's all online, it's all pretty seamless, no paperwork. And then once you've got the account set up, then it's like online shopping. Add something to your basket hit by and then you're on your way. Yeah, we actually we actually didn't experience no gambling. No, no, no, no. It's just the account set up. You're right. You're right. Yeah. We actually didn't experiment is a quick alabi Amazon stock or Amazon socks like that from Amazon. Yeah, I think it was twenty four seconds to buy Amazon stock and twenty nine seconds to buy socks from Amazon. Oh wow. So that's how quick and easy it is. [00:30:03][48.0]

John: [00:30:04] And that's not including delivery truck. [00:30:06][2.1]

Speaker 4: [00:30:08] You make a very good point. Well I'll tell you that I'm sure [00:30:12][4.0]

John: [00:30:12] stocks could have been there in [00:30:13][0.8]

Speaker 4: [00:30:13] time [00:30:13][0.0]

Bryce: [00:30:17] for those that are looking to perhaps trade under a sole trader or a company that they're running or if they're looking to do through self managed super fund. Are there different processes involved in that? Can you do it all under the superhero, all under the same umbrella? [00:30:32][15.2]

John: [00:30:33] So Superhero currently only covers individual accounts. Early next year, we'll roll out a whole suite of additional entity types. But if you wanted to set up a company or in some self account or sole trader account at a at another broker, you would still need to go through those ID verification steps for the entity. So if you had a company, the company would need to be verified. The directors of the company would need to be individually verified as well. So there is a there is a more extensive process. We haven't worked. Superior hasn't launched that yet because we want it to be completely paperless. So so we're almost there. We're almost there on Facebook. So you'll be able to put all of your details in and we'll electronically verify the entire structure. But but if you if you went to a full service broker, you're going to need a certified copy of your trust, the entire SNF trust date and that over with your certified I.D. So there's a there's different processes, but you'd have to you'd have to verify that entire entity time to get those accounts set up so you can do it. It just takes a little bit longer. [00:31:42][69.2]

Speaker 4: [00:31:43] Yeah. Yeah. [00:31:43][0.5]

Bryce: [00:31:45] So to close out, I just wanted to touch on one more question around the safety side of things, unless you had anything else Ren and this has come from a listener, we sort of spoke about the regulation of safety. But what about you know, we've seen overseas that Robin Hood, one of the biggest sort of platforms over there, offering zero brokerage, got hacked and there was a big data breach. What what's the regulation around that in Australia when we're handing over bank details and that sort of stuff? Is there rules and regulations you need to follow? [00:32:18][33.0]

John: [00:32:18] So there are rules and regulations, but it wouldn't necessarily stop what happened in the US to Robin Hood. The the the thing that happened there was was not actually Robin Hood's fault. What what had happened was someone had compromised someone's email account. They went into Robin Hood, put in the email address, clicked, forgot my password, and they then had access to the reset password. Process for Robinhood. They went and reset their password, were logged in, and they went and tried it or withdrew all of their money. So that that's difficult to get around because someone's compromised the the credentials, the same thing could happen to your bank account. Someone could compromise your bank account, transfer all the money out. Now the bank step in and they cover you for those types of fraudulent situations. We have we have security processes in place that actually require Two-Factor authentication every time you place it. Right. So you can log into your account without to third factor authentication. And in a couple of people have asked us, are you going to put TFI on on on our accounts? You can't do anything on your account without two or three. So you can log in. You can say, oh, this is a fraud. Said logged into your account, they'd be able to see that that Bryce had bought his one Afterpay share. And and and that's literally it. You can't you can't do anything else if you want a place to try it. If you want to withdraw money, we have to work on it. And when we saw the Robin Hood incident, we we sort of felt pretty comfortable that we've got we've got stronger security steps in place to to restrict that. So not not all brokers do that in Australia, but I think. I think, you know, you see you see Facebook, you need to factor you can set up two factor authentication on Facebook now and so many of those Facebook accounts hacked. So I think those security measures are very important and would certainly recommend you. You look at that before you open an account with someone. Yeah. Yeah. [00:34:27][128.3]

Bryce: [00:34:28] Nice. Well, that was a great introduction to the fundamentals of brokers Covid what they were a bit of the landscape where they sit in the financial services sort of industry, some of the basic rules and then how to get started. I guess the next question is, what are the factors to consider when looking for a broker that is right for you. So that is going to be episode two. So, John, thank you for your time. Thanks for having me. More info on superhero super hero dot com Dollars you. [00:34:56][27.9]

John: [00:34:56] That's it. We'll talk [00:34:57][0.9]

Bryce: [00:34:58] next [00:34:58][0.0]

John: [00:34:58] episode. Thanks, guys. Thank you. [00:34:59][1.6]

Speaker 3: [00:35:02] This podcast is a production of Equity Mates media, any views expressed by the podcast hosts or any guest on their own and do not represent the views of Equity Mates media or any other employer or associated organisation? Always remember, all information contained in this podcast is for education and entertainment purposes only. It is not intended as a substitute for professional financial label or tax advice. The hosts of these podcasts are not financial professionals and are not aware of your personal financial circumstances before making any financial decisions. You should read the product disclosure statement and if necessary, consult a licenced financial professional. For more information, head to our disclaimer page, where you can find resources to search for a registered financial professional near you. [00:35:46][43.6]

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