Telephone brokers bring share dealing to the masses

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The Independent Online
Pick any period of five years in modern history and shares will have made you money, and probably more than from keeping your savings in the building society. But until recently, investing in shares was expensive, shrouded in mystique and regarded by the average saver as strictly the preserve of the super-rich or City insiders. All that has started to change.

Much of the growth in stock market investment has been fuelled by the rise of telephone-based execution-only broking. Opening an account is simply a matter of supplying the kind of personal and banking details required for any credit transaction, and thereafter all that is needed is a telephone call to place buy or sell orders. There are three big names in the telephone dealing business: ShareLink, CaterDeal (which used to be CityDeal) and Stocktrade. ShareLink is part of the Charles Schwab group, an American firm now reckoned to be the largest execution-only broker in the world. CaterDeal is a subsidiary of Cater Allen, a City bank, while Stocktrade is the direct-deal division of Brewin Dolphin, a private- client broker. All of them offer low-cost share dealing, with charges starting from around pounds 10.

In addition, although execution-only brokers are not allowed to offer advice, they are allowed to provide information and that is the route ShareLink, in particular, has followed. Clients can order a wealth of material on sectors or individual companies in which they may be considering investing.

For more detailed research there is a reference library and a regular programme of seminars and conferences on related topics.

Furthermore, the direct dealers are now expanding from telephone services to on-line dealing using the Internet, and it is here that the link between dealing and information comes into its own. Both ShareLink and Stocktrade offer on-line dealing services through a company called Electronic Share Information. But the dealing gateways are really the icing on the cake. For the service also provides the kind of information which, until recently, was hard for anyone other than City professionals to obtain. These include brokers' forecast data, Extel company information and real-time prices from the stock exchange.The equipment needed is simple: a pounds 500 PC, plus pounds 100 or so for a modem and, say, pounds 20 a month or so in subscriptions. If knowledge is power it could be money well spent.

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