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
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Day In a Page

How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue