Online Brokers and Full-Service
Stock Brokers

Online brokers don’t normally provide advice or share market tips. However, they may provide summaries of advice from a variety of analysts.

This is usually in the form of forecasts of future earnings, or summaries of reports from well-known share-market advisers and analysts.

Keep in mind that analysts’ forecasts need to be considered in tandem with earnings stability. The less stable the earnings over time, the less reliable the analysts’ forecasts are likely to be.

That is why it is recommended to focus on companies whose earnings stability is greater than 75%, or certainly greater than the sector and market average.

But also keep in mind that the market may more accurately price these companies due to greater predictability of earnings. This is more likely for larger companies than for smaller ones where there is less analyst activity.

Of course, what you usually use brokers for is to place buy and sell orders and to get a daily stock market quote. This normally occurs during stock market trading hours.

In Australia, trading hours are from 10am to 4pm. Daylight saving may affect these times depending on where you live.

Online-broker sites may also provide information on company announcements that are extremely useful as they appear daily, and quite often before they get into the newspapers.

This includes information on changes in holdings by directors and information on major initiatives and take-overs that the company is involved in.

In some cases brokers may also provide live stock market feeds of stock prices and a free stockmarket charting program.

Full-service share brokers provide tips on investing through supplying clients with reports on companies that they have researched or that they have bought from research companies. They also do the buying and selling for you.

As a result they charge more than online brokers who do not make purchasing suggestions. If you wish to minimise costs, like I do, consider other sources of advice and stick with online brokers.

Sometimes you can get access to full-service brokers’ recent recommendations from newspapers. It is good practice to carry out an analysis on them by using the template which I will be providing later in my e-book, rather than accepting the advice as gospel.

The benefit to you in checking announcements and advice from these services is that you will become better informed, and hence a better investor.

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