In turbulent markets, investors often ask themselves whether the best advice is to not get any advice at all. Execution-only sharedealing services give you the opportunity to do just that – rely solely on yourself.
As Richard Lock, head of execution-only dealing at Charles Stanley stockbrokers, explains, ‘As an execution-only broker, we carry out the dealing on behalf of the investor, but we don’t offer any advice at all. They do their own research and make their own investment decisions.’
And with discretionary or advisory services having a price tag that can reach hundreds of pounds per year, and the commission on many investment products taking up to five per cent of the initial investment, it is not surprising that more people are turning their attention to execution-only services.
Backing your convictions
‘If you are dealing online, you’re looking at around £10 to £15 for each transaction, although the charging structure differs slightly from broker to broker,’ Lock points out.
‘Generally, investors have to have funds in their online account and stock in custody with the online broker, and for that the broker is able to offer a very competitive commission fee.’
When it comes to making investment decisions, more than half of investors like to make their own choices and one in ten want to be more involved than they are, according to research compiled by Barclays Wealth.
And even in the current volatile market, investors remain confident in their actions. Active traders and bullish investors are seizing the opportunity to benefit from falling share prices, with 52 per cent planning to buy in the current market conditions and a further 37 per cent opting to hold on to their stocks.
Catherine Penney, director at Barclays Stockbrokers, enthuses, ‘It is an optimistic sign to see investors so confident in the present market climate and taking advantage of cheaper stocks.’
Anyone can play
Although it goes without saying that the execution-only approach is ideally suited to more experienced investors, that doesn’t, by any means, rule these services out
for the inexperienced investor.
If you have carried out substantial research and have a strong idea of what sector you want to invest in, then the execution-only approach can be an ideal way to invest in funds. You can also open an individual savings account (ISA) or set up a self-invested personal pension (SIPP) and invest your carefully selected stocks or funds through an execution-only broker.
However, as with most aspects of investment, there is a downside. Because your investments are made on the back of research that you have carried out, they aren’t covered by the regulatory framework that covers financial advice, so if you make a bad choice the blame lies at your feet.
‘Execution-only is particularly suitable for people who are experienced in trading and don’t necessarily want to spend money to have someone else recommend stocks when they can follow their own recommendations a...
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