Advisory broker commission charges/info??

[mralph]

Hello, I was wondering what are acceptable or average commission charges for a good advisory broker service?
Charles Stanley: first £10K - 1.85%, next £90K - 0.5%, balance - 0.25%

Also, perhaps more importanly, what are the important features or neccesities for a quality advisory broker? What should I be looking for? Is it right to be sceptical about houses that have corporate finance departments that urge their clients to back their own comapnies that they act as NOMAD/corp borkers for? (charles Stanley, Collins Stewart, wh ireland, etc etc...) sounds like a bit of an obvious conflict of interest surely?!

Is it important for a firm to have it's own fsa authorisation (well obviously, but...) what are the pro's/con's for a firm that acts as a appointed representative of another?? is this common?

sorry about all the questions but any help or light shed would be greatly appreciated!!!! :cheesy:

 

[shortsell]

Mralph

I'm an advisory broker trading megacap equities for a boutique firm in London, primarily through the US exchanges.

Commissions vary from house to house, the key is the level of charges relative to performance. I charge 1.5% on the buy side up to USD 250k, 1.25% on the balance to USD 500k, 1% on the balance to USD 1m and 0.75% thereafter. That may sound relatively expensive, however for all clients I agree the following commission "rules";

No sale charge on positions showing net profits under 5%
No charge on sales triggered by stop losses

These simple caveats mean that my income is directly linked to my performance - 1.5% is cheap on a 10% return.

My advice would be to find a broker to test out on a trial basis and evaluate whether his/her charges are justifiable long term.

Best regards

Matt

 

[mralph]

Matt- thanks v.much for your helpful post, apologies for the lateness of my reply.

Are you servicing institutional clients? those commission charges+rules look very competitive indeed.

Charles Stanley, Hichens Harrison & Brewin Dolphin are of interest atmo.

what is the av. rate of return for your advisory clients if you dont mind me asking?.....

thnx.

 

[shortsell]

Mralph,

Your timing couldn't be worse - I resigned from my job yesterday! I have to say that this was no reflection on the company or their services, I am looking to move into the world of financial spread betting - chorus of "boo"s from the SB detractors ;-) - to give me access to a wider variety of markets and instruments.

What it does mean is that I can give you some objective thoughts on advisory broking from the inside.

Firstly, I would say that the firm you work with does not in reality effect your return. Unless you are looking to invest GBP 1m + you will be working with one guy who gets direction from a bunch of analysts, but who ultimately make the recommendations to you personally. Therefore you ae just as likely to land a bad broker at a good firm as at a bad firm.

The question to ask therefore is who is really doing the research? If the answer is a broker with a bloomberg platform doing basic TA you are yourself capable of, then 1.5% is extortionate. That said, the big banks that spend millions on research tend to be unexcited by private clients (incidentlly I have heard this complaint of Charles Stanley a number of times in the past) so somewhere in the middle is about right.

In answer to your questions I was servicing Intermediate (experienced) private clients not institutions, and the average portfolio return was I believe circa 17% last year - slightly above the Bluechip indices in the US. Moderate outperformance was always the target as we were concentrating on mega caps - hence our relatively reasonable rates.

I will be keeping in touch with some of the guys from my old place as they are good blokes - i could happily pass on their details if you wish. They are very specific about the type of clients they deal with however - the expectations is that no account starts at less than USD 100k - whether that would apply for you is none of my business!

Hope my ramblings have been helpful.

Matt

 

[shortsell]

Mralph,

you could always give this joker a go - sure his millionaire's plan (oh my god!) will have you re-mortgaging the house in no time!

regards

Matt

 

[TWI]

mralph, my advice is that you will have a vary hard time destinguishing what is worth paying for vs. what is total rubbish before the advice has lost you a lot of money. Need to either take a recommendation from somebody who you absolutley know to have a successful multi year track record in these markets (unlikely you find one who deals with you type of account) or use execution only and a seperate well researched advisory that has no direct link to your account.
Only use I ever found for paying up for bro was in OTC products when you wanted to be first to see biz.