What a broker actually does
When you want to buy 10 shares of a company, you don't call the stock exchange directly. You go through a broker — a licensed firm that has direct access to exchanges. The broker routes your order to the market, finds a matching seller, confirms the trade, holds your shares in custody, and reports your transactions. In exchange, it charges fees.
Types of broker
| Type | What it offers | Best for |
|---|---|---|
| Online/execution-only | Trading platform, no advice | Self-directed investors |
| Robo-adviser | Automated portfolio management | Hands-off investors |
| Wealth manager / IFA | Personalised advice + management | High-net-worth individuals |
| Stockbroker (traditional) | Advice + execution | Complex portfolio needs |
What to look for when choosing
The four key factors are: fees (trading commissions, annual account charges, currency conversion costs — these compound over time); account types (can you hold a Stocks and Shares ISA? SIPP? General Investment Account?); asset range (do they offer the ETFs, individual stocks, or funds you want?); and regulation (is the broker authorised by the FCA in the UK, or equivalent regulator?). Regulatory oversight matters because it determines whether your assets are protected if the broker fails.
The fee impact over time
A seemingly small difference in annual platform fees — say, 0.15% vs 0.45% — costs more than you'd think over 30 years. On a £100,000 portfolio growing at 7%, the difference in fees of 0.3% per year compounds to roughly £30,000 less wealth after 30 years. The cheapest regulated broker that meets your needs is almost always the right choice for long-term, buy-and-hold investing.
"The best broker for you is the one you'll actually use consistently — with the lowest fees and the right account types for your situation."
What this means for you
For most UK investors starting out, a low-cost platform (Vanguard, iWeb, or similar) with a Stocks and Shares ISA is the appropriate starting point. For US investors, Fidelity, Charles Schwab, or Vanguard offer zero-commission index fund investing. Once you have more than £50,000 invested, it's worth reviewing whether a fixed-fee platform would be cheaper than a percentage-fee one.