Dial-a-deal, and let your fingers do the broking

or investment products from your armchair. Here and on pages 16 to 17 we look at the pros and cons of direct selling by phone or PC

Stockbrokers aren't all pin-striped gents sipping brandy in exclusive clubs. The brokers who handle most private investors' deals these days look more like telephone operators, due to the rapid growth of "execution- only" - no advice - stockbroking over the past 10 years.

Execution-only brokers do just what the title implies: they only carry out your buying and selling. If you want advice on which shares to buy and sell, you'll have to go elsewhere. Many investors, however, know exactly what they want to trade and don't want to pay a stockbroker for unwanted advice.

A big attraction of execution-only stockbroking is that it is easy. It is available in many branches of the high-street banks. Most stockbrokers offer postal dealing services. Or you can trade from home via the phone.

To buy and sell by phone, you need to set up an account.Richard Hunter, head of dealing at NatWest Stockbrokers, says: "With most brokers you can set up an account over the telephone very quickly. You can go from having no relationship with a broker to being able to deal within half an hour."

Once your account is up and running, you can trade as often as you wish; all you have to do is phone your broker and tell him to carry out the transaction. The broker will tell you the price at which the shares are trading and will then send you a contract note to confirm the details.

You can even deal outside the market's official opening hours. Many brokers will accept deals by phone at any hour and then trade when the market next opens. This, says Mr Hunter, is "the Martini effect - dealing any time, any place, anywhere".

Execution-only brokers are also cheap. Birmingham-based ShareLink, the UK's largest execution-only broker, charges pounds 10 to buy pounds 1,000 of shares. A traditional advice-based broker might charge pounds 25 or more. At CaterDeal, owned by Abbey National, you would also pay pounds 10 for the trade; at Sharemarket, it would cost pounds 9.

How do you hold your shares? Basically, you have two choices: either you opt to be sent paper share certificates, or you hold your shares through the broker's nominee company.

Both approaches have disadvantages. The trouble with holding certificates is that when you sell your shares, you have to send them to your broker and complete some tedious paperwork. Investors who use nominee companies may lose some shareholders' rights, such as receiving a company's annual report and accounts. But anyone who deals regularly - once a month or more - will probably find it easier to use the nominee option. For occasional investors, paper certificates should be satisfactory.

Other than this, phone broking is dilemma free - you'll probably never even meet your broker. Guy Knight, ShareLink's marketing director, says: "There's no reason for customers to come to Birmingham to see us. Some do as they like face-to-face contact, but it isn't necessary."

One danger with a phone-based dealing service is that you won't be able to get through on the phone. This was an issue during the summer when many investors were trying to sell building society windfall shares - some were held in queues for half an hour or more. Hopefully such problems have been solved. ShareLink was criticised this year by customers who could not get through, but it has installed a new call centre with much greater capacity.

Alternatively, you could deal over the Internet. Three brokers now offer on-line dealing, though to get access to ShareLink, City Deal and Stocktrade you will also have to sign on for the services offered by either ESI or Infotrade. The ESI package is entirely Internet-based, whereas with Infotrade you install software on your computer and then log on to its website to trade. Dealing on-line is similar to trading by phone. Once an account is opened with a broker, you can deal whenever you like by keying in your trades. Your broker will then send you a contract note in the post. Infotrade can update information on your portfolio as share prices change, while ESI has a database of news stories on leading stocks.

Because Internet-based brokers do not have to pay operators, dealing on-line is often cheaper than a phone service. Infotrade charges pounds 14.70 per month for its services, which include Internet access. ESI's basic service is free; more comprehensive facilities cost pounds 5 per month and the deluxe service pounds 20 per month. To get the best deal, shop around between the brokers on the Infotrade and ESI sites.

q Contacts: City Deal, 01708 742288; NatWest Stockbrokers, 0171 895 5955; ShareLink, 0121 200 2242; Sharemarket, 0161 237 9443; Stocktrade, 0131 529 0101; ESI, www.esi.co.uk; Infotrade, www.infotrade.co.uk

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Doctor and Clara have their first real heart to heart since he regenerated in 'Deep Breath'
TV
News
people
Life and Style
Apple showed no sign of losing its talent for product launches with the new, slightly larger iPhone 6 making headlines
techSecurity breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
News
The official police photograph of Dustin Diamond taken after he was arrested in Wisconsin
peopleDownfall of the TV star charged with bar stabbing
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

Homeless Veterans appeal

Former soldiers pay their respects to a friend who also served
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?