Some of the best-known names in finance, including Alliance and Leicester, the Halifax and Norwich Union, have floated on the stock market and produced "windfall" shares for their customers. Savers with the Abbey National, the first large society to convert, received 100 free shares. They are now worth over pounds 11 each.
Some 12 million adults in the UK now own shares and a further 4 million invest in the stock market through collective funds such as unit trust PEPs. The boom in stock market investment has created more competition for low-cost, simple stockbroking services. You can buy and sell shares via the phone, the post, over the internet, or even from computer screens in bank branches.
Like most financial professionals, traditional stockbrokers offer advice. They may go further and, as "discretionary" brokers, take on the full management of a client's portfolio. But not everyone wants to pay for advice. Wider share ownership has increased the market for execution- only broking services, which simply carry out orders to buy and sell shares.
Buying equities direct is cheaper than using a unit trust, and gives investors the chance to beat the fund managers at their own game.
Using a low-cost broking service means there is more money left over to put into shares. This in turn makes the stock market more attractive to individual investors, which cuts costs further. In the US, broking fees have fallen dramatically, especially with the introduction of internet- based share dealing. US execution-only brokers now charge as little as $7 per trade (just over pounds 4).
"We may not get the same level of prices as in the US," suggests Richard Hunter, head of dealing services at NatWest Stockbrokers. "But with more and more services, the pressure on commissions will be downwards. There may be two sorts of brokers: discounters and deep discounters."
According to Mr Hunter, typical commission rates for execution-only services have already fallen from 1.65 per cent of the value of shares to around 1 per cent. NatWest, for example, charges 1 per cent for deals up to pounds 4,000 on its phone-based, Brokerline service, with a pounds 20 minimum. NatWest's branch-based dealing service charges 1.5 per cent on deals up to pounds 10,000, with a pounds 20 minimum fee. NatWest also offers an advice phone line for execution- only clients at pounds 75 a year. Internet broker The Share Centre charges 1 per cent for trades in the FT-SE 100, with a pounds 2.50 minimum.
Most private investors in the UK deal over the phone but the internet offers the possibility of even cheaper trading, and almost real-time deals. Broker Charles Schwab operates a system that lets its clients access deals on the London Stock Exchange's Sets computer via the internet. Trades and prices are confirmed in seconds.
Cheap and simple trading is also tempting investors to look more actively at their portfolios, says Angela Knight, chief executive of APCIMS, the stockbrokers' association. "Nearly a third of the adult population holds shares. If it is cheap and easy to do something with them, there is less temptation to leave the share certificate behind the clock on the mantelpiece."
The number of bargains struck by private investors on the London Stock Exchange is growing, especially among buyers. This is significant: it shows that activity is not just investors offloading their windfalls; they are buying new shares to replace them and building portfolios.
Investors who want to choose their own shares have access to an increasing amount of material to help them. Company reports are an obvious first step, as are brokers' newsletters. It can often pay to track a share for a period before buying, and to check the company's performance and share price over the past few years. Internet sites such as Interactive Investor and Motley Fool (see page 24) are a good starting point. Proshare publishes a useful guide to reading reports and other company information.
As well as commissions and stamp duty on buying shares, brokers may charge registration or account fees, especially if shares are held in a nominee account.
Investors should also look at whether the broker has plans to trade on the internet, how it deals with out-of-hours dealing, and the time it takes to complete a trade. Frequent traders who want to ride movements in the markets should look at internet systems such as Charles Schwab's and one currently being developed by Barclays Stockbrokers.
Contacts: NatWest Stockbrokers, 0345 224488; Charles Schwab Europe, http://www. schwab-worldwide.com/europe; APCIMS, 0171-247 7080, www.apcims.org; Proshare, 0171-394 5200, www.pro- share.org.uk; The Share Centre, www.share.co.uk
Joining a share club is an easy way to select and buy shares. Clubs are made up of anything from three to 20 people who pool cash each month and make joint decisions on which shares to buy. A club meeting is also a social occasion and you don't have to know anything about the stock market to join. Most clubs operate on the "buy what you know" basis by drawing on members' interests and common sense.
If you are interested in setting up a club with friends or colleagues, Proshare has an investment manual telling you all you need to know. It is available to Independent on Sunday readers for pounds 20 (usual price pounds 25) including postage: 0171-394 5200.