Financial planning: Don't neglect the most important aspect of your portfolio

With shares in around 1,800 companies quoted on the main stock market alone, it is no wonder many investors want an adviser to help them choose a portfolio. Trouble is, finding a stockbroker is often as time-consuming as selecting individual shares. But, David Prosser writes, it is worth making the effort.

Several hundred brokers offer investment advice in the UK. Unfortunately, there is no perfect route to finding the ideal one to meet your needs. Sometimes, it can be a matter of trial and error. Nevertheless, there are steps you can take to avoid ending up with an unsuitable adviser.

The first is to decide how much advice you need. For a basic service, you need an advisory stockbroker, who will expect you to approach him with ideas for deals. He or she will execute deals on your behalf but will also tell you whether he thinks potential trades are a good idea. Advisory brokers can also offer views on the general outlook for the stock market.

Some investors are happy with an advisory broker who divulges his opinions over the telephone. One firm, The Share Centre (01442 890800), even has a premium rate telephone service that you can call for advice on individual stocks. You then pay very low dealing charges. Other investors, however, prefer more of a personal service.

The next rung up the ladder in advice terms is to ask a portfolio manager to make your dealing decisions. Advisory portfolio managers won't deal without asking your opinion first while discretionary portfolio managers take your money and tell you every so often what stocks they have bought on your behalf and how they're doing.

The more advice you need, the more you will have to pay. Portfolio managers, for instance, levy a fee at least once a year. Advisory brokers take a commission each time you deal.

Clearly, charges matter. High fees will eat into your returns quickly. However, if you're looking for a stockbroker who offers advice, the quality of that advice is more important than the charges the broker levies.

Once you've selected the type of broker that you need, start looking for an individual firm. Apcims, the private client stockbrokers' association, is a handy starting point. It publishes a list of all its member brokers in the UK, with information on the services they offer. "This is a fairly comprehensive document," says Sarah McGuffick of Apcims. The guide, which is free, also gives a geographical breakdown of brokers in your area.

With the help of the association, you should be able to identify a number of potentially suitable local stockbrokers. A good way to narrow down the field further is to ask friends and relatives.

Then try to compile a shortlist of candidates, using the guide to check that they offer any specialist services you require. Do not feel you have to sign up with the first stockbroker you meet. It makes sense to visit four or five firms. The key is to find a broker with whom you feel comfortable.

When you visit brokers, ask about their experience with clients who have similar sums of money to invest as you. A broker should be able to give you an objective indication of how clients have fared with his advice.

It's also important to check on the resources that brokers have available. A very small firm won't necessarily fluff your investments, but a broker who has access to more research materials has an obvious head start. In addition, ask about the qualifications of anyone who will be advising you and the level of professional indemnity insurance they carry.

Finally, when you find a broker you like, make sure that he or she understands your aims very clearly. Your aims should be reflected in a client agreement letter.

It is possible that even if you're very careful about finding a broker you may end up dissatisfied. If this should happen, talk through your concerns with the broker and give the firm time to improve. Equally though, remember that you can change brokers whenever you like.

Apcims, 112 Middlesex Street, London EH1 7HY (0171-247 7080).

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea