Stockbroker vs financial adviser: which is right for you? 

Investing is a great way to maximise your returns outside of a traditional savings account, but it comes with risk, meaning you could get less than you initially put in. 

One way to mitigate risk is to seek help from an expert, such as a financial adviser or a stockbroker. We reveal what an adviser and a stockbroker do, the differences between them, and the pros and cons.  

What is the difference between a stockbroker and a financial adviser? 

A stockbroker differs from a financial adviser.  

Firstly, there are four different types of brokers: 

• Stockbroker: They are responsible for managing and executing the buying and selling of shares in the stock market. 

• Forex broker: If you’re interested in investing in currencies, a forex broker buys and sells currencies for you. 

• Full-service broker: A full-service broker offers various services beyond managing, executing, and buying and selling investments, which may include research or retirement and investment planning. However, they tend to charge higher fees than other brokers.  

• Discount broker: A discount broker only executes trades on your behalf – they don’t offer any additional services, such as advice. Due to this, discount brokers often charge a lower commission than other types of brokers.  

When it comes to financial advisers, it’s essential to distinguish between the two main types, restricted and independent.  

• Restricted adviser: Can only recommend financial products from a select number of providers or for certain areas

• Independent adviser: Can recommend products from the whole market.  

A financial adviser, who must be regulated by the Financial Conduct Authority (FCA), can help with retirement planning, investing, buying property, planning for care costs, estate planning, insurance, equity release and general financial planning. 

They take into account your unique circumstances and long-term goals to recommend the most suitable financial products for your needs. 

What are the pros and cons of a stockbroker?  

Now, we’ll explore the advantages and disadvantages of using a stockbroker. 

Advantages of stockbrokers

• Wide access to investments: A stockbroker will have access to a wider range of investments than DIY investors. For example, you may be able to access different assets or invest overseas, offering you the opportunity to diversify your portfolio. 

• Expertise and advice: With a stockbroker, you may be able to benefit from their expertise in investing and take on their bespoke recommendations. They can also offer regulated advice, provided the company and individual are regulated by the FCA. A stockbroker may also have access to useful resources that can help with your investment strategy.  

• Record-keeping: A stockbroker can maintain a record of your investment activity, including all trades. This can be useful for staying on top of potential tax liabilities, such as when selling an investment. 

Disadvantages of stockbrokers

• Fees can vary: Depending on the type of stockbroker you use, the fees, including trading charges, can vary. For example, a full-service broker can charge higher fees than a discount broker. You should be clear on the services required and understand any fees.  

• You may need to invest a set minimum: Some stockbrokers may require a minimum investment amount when you want to work with them. This can vary from a few hundred to a few thousand, and you may face withdrawal fees, so it’s worth checking in advance. 

What are the pros and cons of using a financial adviser? 

There are many advantages and some disadvantages about using a financial adviser to consider.

Advantages of financial advisers

• Personalised advice and recommendations: A qualified financial adviser can offer tailored advice based on your circumstances. Additionally, they can access and recommend financial products, although it’s worth checking if they are restricted or independent.  

• They can save you time and money: An adviser can save you time by helping to plan your finances, alongside saving you money by recommending the most suitable policies. They can also manage your investment portfolio, but this will incur an ongoing fee.  

• Expertise: Whether you want to reduce tax liabilities or support building a diversified investment portfolio, an adviser can offer their expertise to help with decision-making.  

• Peace of mind: Financial planning can be complex, so talking to a professional adviser can provide peace of mind and reduce stress.  

• Advisers are regulated: As financial advisers are regulated by the FCA and the Financial Services and Markets Act 2000, they must act in your best interests and meet certain standards. If you’re unhappy with the service provided, you can complain, including to the Financial Ombudsman Service. 

Disadvantages of financial advisers

• The cost of financial advice: The fees you pay for financial advice vary depending on the type of assistance you require. While you can obtain an outline of the fees in advance, it can be expensive to receive expert advice – but the benefits should generally outweigh the costs.  

• Potential conflict of interest: Financial advisers should recommend the right financial product for your circumstances, but may have a conflict of interest. It’s worth asking about any potential conflicts of interest and why they’ve recommended certain products.  

• Overreliance on an adviser: A financial adviser can help with your finances, so you reach your long-term goals, but it’s important not to rely solely on them. It’s worth staying informed of any policies or news that could affect your money.  

Is a financial adviser or stockbroker right for you? 

Whether a financial adviser or stockbroker is suitable for your needs depends on what you want help with.  

If you’re interested in specific services, such as investing in currencies or buying and selling shares, it may be worth considering a stockbroker. 

However, if you need help with a broader range of areas, such as building an investment portfolio tailored to your long-term goals, or assistance with retirement planning or buying a property, a financial adviser may be a more suitable option.  

Get expert financial advice 

It can be challenging to decide on long-term financial goals and figure out how to achieve them, but it doesn’t have to be. 

Unbiased can quickly match you with a qualified financial adviser who can help you build a stronger financial future.