Full-Service Stockbroker: These brokers offer a hands-on approach, providing personal attention and investment advice. They have higher operational costs, resulting in increased transaction fees or portfolio churn. Typically, high-net-worth individuals who prefer not to manage their investments opt for full-service brokers.

Discount or 'Execution-Only' Broker: Discount brokers offer low-cost execution-only trading services without giving investment advice. This is the choice of most UK retail investors, and many major stockbrokers fall into this category. Full-service stockbrokers usually serve clients with substantial portfolios.

Share Dealing Service: These brokers specialize in executing trades for shares. While their primary focus is on shares, investors can use listed collective investments like investment trusts and ETFs to create diversified portfolios.

Fund Supermarket: Fund supermarkets are execution-only brokers specializing in various fund types, including investment trusts, unit trusts, and open-ended investment companies. Some may also offer share dealing services.

Investment Platform: Investment platforms encompass online accounts that allow investors to hold various investments. They can include stockbrokers, crowdfunding websites, and specialized providers.

Automated Portfolio Service (Robo-Advisers): Automated portfolio services match investors' risk profiles with pre-designed portfolios. Investors can set up standing orders to automate their investments. Examples include Nutmeg, Wealthify, and Moneyfarm.

Online Trading Platform: Online trading platforms target active investors such as day traders or swing traders. They provide detailed market data and customizable charting, catering to technical analysis. Some may have tiered pricing structures based on the number of trades.

CFD Broker (Contract for Difference): CFD brokers allow traders to speculate on price movements without owning the underlying assets. CFDs involve high leverage and can lead to significant gains or losses. They are not suitable for long-term investing and have different regulations than traditional stockbrokers.

The charges encountered by investors can be grouped into five categories:

• Dealing fees / trading commission
• Account fees / custodian fees / management charges
• Foreign exchange fees / exchange fees
• Closure fees / transfer-out fees
• Withdrawal fees / deposit fees

Not all stockbrokers charge for each of these services, so it's vital that you get well acquainted with the fees and charges disclosures of any stockbroker before you join. It's impossible for a comparison page such as this one to communicate all nuances within a straightforward table.

Forecast your trading frequency

The main source of income for traditional stockbrokers is trading.

Stockbrokers charge clients between £0 and £12.95 to execute a buy or sell order on your behalf. Fees are charged per trade so investing a pot of money into five companies will incur five fees.

Understanding how many trades you will place per month is crucial in understanding which stockbroker will save you the most money when doing a stockbroker comparison.

For the sake of diversification, you will want to invest in a minimum of 20 companies to avoid being too exposed to any individual business. You will quickly appreciate that trading fees can get quite expensive for active traders who invest in individual company shares.

When comparing stockbrokers, you will notice that some offer discounted rates to people who trade very frequently, for example 10+ trades per month.

Share dealing charges are often tiered. But don’t feel tempted to make trades solely to access better rates - you'll still end up paying more overall. These discounts are little more than a rebate on your large spend with the broker.

To qualify for the £8.95 discounted rate offered by Hargreaves Lansdown, you need to spend £89.50 per month – over £1,000 in trading fees per year. If this was saved and invested instead, £1,000 per year could grow to be worth £15,000 after ten years (growing at 5% per year.)

The only effective way to guarantee you reduce the cost of investing is by trading as little as possible across the year. This is one of the reasons why we encourage investors to build their basic investment portfolio using funds. Funds allow investors to own a variety of companies via a single trade, and better still – many stockbrokers process regular transactions for a tiny fee.

Get to grips with account fees

Beyond trading fees, stockbrokers also charge fees to your account each billing period. These can be labelled as account fees, platform fees or custodial fees. 

It's important to factor these fees into any comparisons, as they can be significant - particularly for small portfolios. 

These charges were introduced in the last few years. A change in UK regulations meant that stockbrokers could no longer collect commission payments from fund managers in exchange for referring investors to their funds.

Platform charges usually take two forms:

1. Fixed platform fee or a capped charge – These are suited for large portfolios, as a fixed £ cost becomes quite tiny relative to the value of assets in a large portfolio. A an annual fee capped at £100 is very affordable for a £100,000 portfolio, for example.
2. % based platform fee – These are really helpful for small investors. By charging only a percentage of your assets, such as 0.35%, the fees stay small, even for investment pots worth less than £2,000. 

Make the final cost comparison

To make a fair stockbroker comparison, calculate the ‘total annual cost’ of each provider by adding up the annual platform fee, plus the expected costs of your trades.

By using the ‘total annual cost’ benchmark, you may discover that the cheapest broker for you is neither the one with the lowest trading fees nor the provider with the lowest platform fee.

It's important to think ahead. Try calculating the platform fee using the best guess of your expected portfolio value in three years time. It can be quite costly to switch between providers at a later date, therefore you will want to choose an investment platform that fits your long term investment goals. It can take as little as £30,000 in an account for the fixed fee options to look more attractive. 

Your choice of broker should align with your investing style, which can be influenced by your investment preferences, trading volume, and market outlook. Investing styles vary and can often overlap. You might find that you align with multiple styles. Here are some examples:

1. Individual Company Investing
2. Fund Investing
3. Dividend Investing
4. Growth Investing
5. Active Investing
6. Value Investing
7. Day Trading

For instance, if you prefer funds over individual shares, select a broker that offers fee-free fund purchases. If you aim to build a portfolio of dividend-paying stocks, opt for a stockbroker with low share dealing fees and cost-effective dividend reinvestment services. If you have a smaller investment pot, consider brokers with account fees based on a percentage of your assets, as this can result in lower charges. Your investing style should guide your choice of broker to best suit your needs.