When it comes to making direct investments on the stock market, you’ll need a stockbroker. A stockbroker is a qualified professional who buys and sells securities (stocks and shares) on your behalf.

Fund managers and independent financial advisers (IFAs) also use stockbroking services to invest money on your behalf. Stockbrokers may offer their services over the internet, by telephone, face-to-face or through the post. There’s a charge involved for using a stockbroker to buy and sell on your behalf, although online stockbrokers may give you access to software that you can use to do the buying and selling yourself.

If you invest directly in stocks and shares, then your money’s going to be exposed to much higher levels of risk than those you’d find in a collective investment such as a Unit Trust or an OEIC. It’s also true to say that your returns could be much higher. The value of your investment can go down in value as well as up, and you may not get your money back. That’s why it’s really important to know what you’re doing, before you invest.

What does a stockbroker do?

If you do want to trade stocks and shares directly, then a stockbroker can help you. In general a stockbroker will offer three types of service:

• An advisory service, which involves giving you advice on what to buy or sell
• A discretionary service, in which they’ll make decisions for you
• An execution-only service, in which you tell the stockbroker what to buy or sell (increasingly, this is becoming an online service).

Questions you might like to ask your IFA or a stockbroker

What’s the minimum trading limit?

What are your charges, when do I pay them?

Do the charges vary depending on the type of trade or time it is carried out?

When and how will you transfer title of the assets to me?