When Does It Make Sense to Change Your Broker?
Most traders in popular investment spaces rely on brokers in one way or another. Traditional investment avenues, such as over the phone or in person, tend to require a specific professional individual who can provide the service and buy the instrument on your behalf. The term “broker” also now refers to internet-based companies that offer platforms allowing you to trade. But when does changing your broker make sense – and why should you make the shift?
Fraud and Crime
First of all, the most pressing and urgent sign that you need a new broker is if you have good reason to suspect that some sort of fraud has taken place. Say you log into your account on an online broker, and there is a suspicious transaction there.
Or perhaps you instructed your in-person broker to buy some instruments, and you sent the cash, but you later find that the broker can’t produce evidence or deliver returns. In this sort of case, it’s wise to calmly gather as much information as you can and then go to the police – before launching a detailed hunt for a new, more scrupulous broker.
Fees and Charges
However, there may be other reasons why changing your broker makes sense. A trader’s priorities often change over the course of their trading career, and as a result, the broker they choose might change too. Take the example of fees. When you first sign up to a broker, a proportional trading fee may make sense.
After all, 1%, say, of your relatively small investment capital amount won’t translate to much in numerical terms. But if your portfolio has grown to, say, £100,000, then a proportional fee of even 1% would resemble £1,000 in lost revenue for you. As a result, looking for a broker who charges a flat fee of under £1,000 would end up being more cost-effective. This FXTM review is a good case study in discovering exact details of charges, and shows clearly how spreads, fees and more can be analysed.
Over time, new financial instruments come onto the market. In the modern age, many of these – such as cryptocurrencies – are often technical in nature, and require some specialist knowledge. If you want to move into an investment space that your broker doesn’t have the expertise to offer, then switching may be your only option.
A detailed comparison of any two brokers will inevitably reveal some subtle differences in what products they offer, and after a while, many traders often find themselves deciding that a broker who can offer something a little more technical is better-suited to their needs.
Changing broker may seem stressful, but there are often good reasons. Switching can save you cash, for example, especially if the fee structure of the new broker is better for your own needs and investment portfolio size. With new technical developments on the horizon all the time, it’s likely that anyone who wants to operate a dynamic and forward-thinking investment portfolio will need to switch their brokers from time to time.