Bitesize: What’s the best broker to get started with?

Alec: [00:00:07] Welcome to Bitesize on Get Started Investing. In this series we feature some of our favourite lessons, quotes and moments from the podcast. If you'd like to listen to the full episode, we've included the link in the show notes. 

Bryce: [00:00:21] We have a lot of stuff coming through all of our channels regarding the community members starting their investing journey and wanting to know what is the best broker to get started with. Of course there are many brokers out there with many different offerings. 

Alec: [00:00:37] Yeah, there's obviously many brokers out there because if there was only one, it wouldn't be a question.

Bryce: [00:00:43] That would be a super easy episode. 

Alec: [00:00:44] Yeah, yeah. There's been a lot of interest in markets lately, obviously, with everything that's going on and there's a lot of new people in the equity markets community, but there's also a lot of people in the community that are probably a little bit confused by all the options out there. And so we thought, get back to basics. This will definitely stimulate some debate in the community because people definitely won't agree with everything we say in this episode in terms of what brokers write, but that's kind of the point in a way. So we'll get into that. 

Bryce: [00:01:10] Yeah, I'm going to say we're not going to say which brokers are the best. We're just going to try and frame the brokers to particular investor styles that may suit you.

Alec: [00:01:21] Yeah, yeah, yeah. The different brokers that are right for different people who want different things, but more importantly, who invest in different ways. So we're going to try and scratch the surface of this broker is the best and go a go a step deeper and say, if this is you, this might be the brokers that you want to check out. None of it's sponsored. It's all just our opinions. Importantly, it's our opinions. So yeah. 

Bryce: [00:01:42] So Ren, for those that have just joined the show, this is the first episode they've ever come across and they have no idea what a broker is. Let's go back to basics and pardon the jargon and explain the key term being broker. What is it? 

Alec: [00:01:57] So it is basically the person or platform that buys and sells shares on your behalf. So if I want to buy a share, I don't call up someone that owns it and ask to buy it from them unless we have serious cash and we're looking to buy serious positions, we do it through a platform and then that goes into the market and matches a buyer or seller and gets us the shares or sells the shares for us. 

Bryce: [00:02:20] Nice. So one thing that we also want to call out is that sometimes it sounds like people feel like they need to choose the best broker at the time and that's going to be it. I think our comment to that ran would be that there is no need to lock into a broker. We'll get to that in a second. It doesn't cost anything to sign up to brokers. You can play the field a bit, go in, understand what it's all about, and then make a decision. And if things change, you can change. 

Alec: [00:02:47] It's like prices, tinder profile, you know, he's always got multiple options, which is not true, I think. Yeah, you're right. Like with super, you want to have one super fund and you want to make the right decision because if you have multiple super funds, you're paying multiple sets of fees. And so that decision is more like, I need to make a choice what's going to be the right decision? The great thing with brokers is that you can play the field a bit and it's very easy to change those days and it's very easy to sign up to new brokers. So the biggest take away from my personal investing experience and I think that people can remind themselves when they're making this choice is don't let perfection be the enemy of the good here. The most important thing is that you're getting into the market, starting your investing journey, learning what works for you in terms of investing and what works for you in terms of what broker you want. You don't have to hit it out of the park the first time. You're not married to your broker the minute you sign up and it doesn't cost you anything to leave them. So yeah, don't let perfection be the enemy of the good. Play the field just like price does. Not true. And yeah, be willing to change if you're not happy or you want to try something new. 

Bryce: [00:03:57] So there's a lot happening in this space at the moment. You've probably picked up over the last few episodes. You've had a partnership with eToro and we've got a number of new players coming into this space, which is great for us as retail investors. The more competition, the better. There's probably four ways that you can frame brokers. First is obviously your full service. You give them a call, you pay them a fee each month or a year and they really help you out with stock picks and all that sort of stuff. But they're not for us. 

Alec: [00:04:24] Yeah, the personal touch is a little too expensive for us at this point, but I'm going to say forever probably. 

Bryce: [00:04:31] I don't think I don't think we will ever need it. So we're not going to be discussing them today. What we will be talking about are the brokers that are generally attached to the banks, the big banks. Then there are your online only brokers and platforms. And then of course, there's the micro investing brokers, I guess, that give you access to stocks in a different way. So before we crack into that, there are a number of themes that we're kind of seeing coming through this space at the moment around social engagement. Obviously, low fees are becoming.

Alec: [00:05:02] I hate the fact that social engagement is first, but. It is what it is.

Bryce: [00:05:07] I mean, it doesn't have to be funny. It's just how we. 

Alec: [00:05:10] You made the list and you put it first. And that's one thing. 

Bryce: [00:05:13] And I think it's one of the newest trends that is coming through as we'll discuss in a bit. Obviously, information is very important when it comes to brokers as well as access to different asset classes. Anything from your point of view Ren? 

Alec: [00:05:25] No, I think they're the main ones. Fees, social engagement, the information you get, and with information, it's also the education and support that comes with it. And then finally the asset classes and the markets that you can access. So what you can actually buy through the broker. 

Bryce: [00:05:41] Now, we have answered this question a number of times in the show, so apologies for repeating ourselves if you have listened from episode one. But for those that. 

Alec: [00:05:48] We just got ourselves in every interview with the same questions, they could be repetition. 

Bryce: [00:05:55] So Ren, what brokers do you use and why? 

Alec: [00:05:59] To extend the analogy of Bryce playing the field. I have three different brokers that I'm signed up to and hold shares in, and for me they sort of all engage at different points in my investing journey. So I started with CommSec and that's because I was a loyal Commonwealth Bank customer from the time of my first Dolomites account. They got me while I was young and they've kept me. And so when I wanted to start investing, the easiest way to do it was just to extend my banking services into investing. So I have a CommSec account. The earliest shares I ever owned were in the CommSec account and I still use them from time to time, but I also just hold those existing shares with them. Along the journey we started Equity Stake launched in Australia. I wanted to access the US stake, offered a cheaper and easier alternative to access the US market than CommSec did. So I signed up with stake and I have US shares with stake. Then a bit later on I found out about IAG. AJ offers more markets and stakes. It offers lower brokerage than CommSec. And so I also have holdings through I j and it's not like I moved on from one to the other, depending on what I want to buy. I made a decision about what I know, what I think is going to be best. So yeah, have three that I have. What about you?

Bryce: [00:07:16] What about a broker is important to you. 

Alec: [00:07:19] Face. A face in the markets I can access are the two most important things. This is personally, for me, So you know my feelings about social media, aside from the equity mates community that we've built on social media, I'm not one for the massive social engagement that doesn't really interests me that much in terms of the information. I think I'm not too worried about that. There's plenty of sources of information out there. So for me, getting access to markets, access to the US markets, access to European markets and obviously Australia as well is really important. And then doing it at the lowest possible cost. 

Bryce: [00:07:53] Nice. I guess that's why we are Equity Mates. If you enjoyed that bite size, you'll find a link to the full episode in the shownotes.