Background & Reputation of the broker
The first step is to check the background of the stockbroker and their reputations.
i. How old are the brokers and what their customers say about their platforms? You can read the reviews, complaints and have a survey of the personal experience of the existing users.
ii. If you are going to use the mobile app to make investments, check the mobile app ratings on the google or app store.
iii. Another way of checking the reputation of brokers is by looking into how big they are based on their total number of active clients.
iv. The bigger the stockbroker, the more stable its trading platform. Here’s a list of top 20 Share Brokers in India 2022:
Brokerage and Other Key Charges
Stockbrokers are the registered members of the stock exchange and they facilitate buy & sell orders in the share market for their clients. They charge some commission for offering this facility known as brokerage charge.
Now, there are two types of stockbrokers in India: A) Full-service broker & B) Discount broker.
i. Full-service broker provides advisory service and other premium facilities along with the trading platform. These brokers charge high commissions on every trade their clients execute as a percentage of each trade executed. On the other hand, discount brokers only provide the trading facility. They offer low brokerage and charge a flat fee per transaction.
Choose a suitable broker according to your preference. If you want stock research advisory, research reports, and other personalized facilities, go with a full-service broker. If you are planning to invest or trade on your own and want to do the least brokerage, go with a discount broker.
Brokerage Charges for different brokers:
Full-service brokers: 0.3-0.5% of Turnover of Delivery | 0.1-0.275% of Turnover on Intraday
ii. Discount brokers: FREE for Delivery trades | Flat Rs 10 or 20 for All other trades
These days, most investors and traders are preferring discount brokers (Firms like JK Securities, Zerodha, Upstox, Angel Broking, etc) as it helps them to save thousands of rupees which is deducted as brokerage. Moreover, many discount stock brokerage firms have started offering premium features to their clients at no additional cost.
If you are new to investing/trading, you will require some customer online broking service, unless you already have a mentor or advisor. Check the customer service provided by the stockbroker.
Investing using online broking platforms is easy to use and has a number of resources available on the internet. However, there may be a few times when you will require technical support. It’s good to have someone to look for in such cases. Do not avoid customer services. Look for the reviews before opting for any stockbroker and if the customer service is poor, then search another broker.
An easy way is to try calling their customer care helpline number. If it takes years for the customer executive to pick up the phone, then avoid that stockbroker. Further, if you want one-to-one customer service, then check the website of the stockbroker if they provide personal services. In addition, you can also look into if Investors Education initiatives or archives of issues are available that you can navigate through in case you’ve stuck anywhere.
Trading Platforms Offered
This is one of the most important factors to examine. Inspect whether the trading platform offered is friendly, its user interface, latency, and easy to use. Check the demo videos of the trading platform on youtube. Moreover, also read the reviews of the mobile app on Google and iOS platform.
Checking the trading platform is the key factor while choosing a stockbroker and all other factors are secondary. This is because you’ll spend a lot of time on the trading platform only to make your buy/sell orders. If you’re not comfortable with the platform, it will be a lot of trouble for you.
Advisory & Research Facilities
If you are ‘not’ planning to invest on your own and need an advisory/ research report, then check for the facility offered.
The reliability of the advisory is also a must to check. The stockbroker should have a good reputation in advisory and research works. Many leading stockbrokers in India offer Research reports and advisory facilities like JK Securities, Angel Broking, ICICI Direct, Motilal Oswal, Sharekhan, etc.
Range of Facilities Offered
If you are looking for diversified investing and trading options, look for the one stockbroker which offers all. For example, if you’re planning to trade in Stocks, Derivatives (futures & options), currencies, commodities etc, then look for a broker that offers the facility to trade in all, not in just one.
Similarly, if you’re planning to also invest in other options like mutual funds, bonds, etc, then check if this range of facilities is available with that broker or not. These days, most leading brokers offer services in multiple investments and trading instruments.
There should be ‘no’ or minimal hidden charges while investing and trading. All the charges incurred while transactions should be specifically mentioned. Ask for any hidden charges with your customer care executive before selecting the stockbroker. Besides, you can also check the pricing and charges section of the stockbroker to know about all the charges that must be paid by clients.
Most stockbrokers offer brokerage calculators on their websites now. Remember, transparency is the key to any service.
The easy linking facility of your trading account with your savings account should be available. Look for the fund transfer process in your stockbroker. Online money transfer and withdrawal should be fast and easy. Moreover, also check if there is any fund transfer fee with that stockbroker.
Tools for Education/Learning
Many stockbrokers provide education facilities to their clients. For example, JK Securities, Zerodha educates its clients via ‘Varsity’ and through its blog for free. If you are in the learning phase, look if any tools of education are available with your stockbroker.
This is not a ‘must have’ factor for your stockbroker, however, it can be a worthy add-on.