There’s still a helping hand for those who decide to go it alone

With so many managed funds effectively mirroring indices like the FTSE 100 but making substantial charges that erode performance, it is no wonder that increasing numbers are moving to an execution-only basis for their share dealing.

It does not mean that the individual is adrift in a savings ocean. Many stockbrokers offering execution-only provide such complementary services as:

n market research;

n easy tracking of markets, past and current;

n individual company analysis;

n valuation tools and sometimes share price alerts.

In addition, some brokers may provide a ‘passive’ helping hand, such as indicating the funds that would fulfil particular criteria, but again this is on a free basis. Without publicity, both The Share Centre and Charles Stanley’s execution-only arm (Garrison Investment Analysis) are just such helpful brokers.

Inexpensive dealing costs are clearly one attraction but this depends not only on the frequency of trade but also on any annual management charges and fees for tax wrappers (such as an Individual Savings Account or Self Invested Personal Pension or SIPP).

“Cheaper is not always best,” warns Patrick Connolly from independent financial advisers AWD Chase de Vere, pointing out that individuals who use execution-only services are fully responsible for their decisions and cannot blame the broker if it all goes wrong.

“There is a real danger that arming people with a little bit of financial knowledge will lead to them making the wrong decisions and their finances suffering as a result. We commonly come across clients who have taken too much risk. They are usually happy if markets are going up but come to regret their decisions when their investments fall,” says Mr Connolly.

Check also on the range of investments that can be made. X-O, for example allows Exchange Traded Funds but excludes unit trusts and foreign stocks. It is the brand name for Jarvis Investment Management, which was established over 25 years ago (0871 811 1001). It charges just £5.95 per trade and has no annual charge or management fee for ISAs.

Halifax Online Share Dealing says it can secure the best price as it can visit up to 24 market counterparties, depending on the stock traded (08457 225 525). Its dealing fee is £11.95 online or £15 by telephone. It permits international trading but charges a higher fee of £17.50.

One of Halifax’s great points is the option to buy UK shares for just £1.50 commission on set days each month through a regular plan. In addition, they offer free tutorials which can help you decide on your trading strategy.

Most stockbrokers today work without paper certification but if this is preferred, check the availability and cost. Leeds-based T.D. Waterhouse has a competitive £8.95 online fee with a minimum 15 trades per three months or £12.50 online usually. However, the fee is raised by £40 if it is a certificated trade (0845 601 6200).

An account management fee of £10 plus VAT is levied each quarter if there has been no trading and the combined cash and stock valuation falls below £5,000.

Barclays Stockbrokers will chalk up almost 25 years trading shortly and there is no need to hold an account with the bank (0845 601 7788). It has a three-tier pricing structure per deal of £12.95 (1-14 trades per month), £9.95 (15-25 trades) and £6.95 (25 trades and over monthly).

There is an annual ISA fee of £30 if the investment value is up to £7,500 and £50 above whilst a SIPP attracts £50 a quarter with VAT added to all these charges. However, the fees are waived if the only investments held are from over 1,000 available on their fund list.

When choosing a broker, many investors do not appreciate the difference between an execution-only trade on a retail service provider platform versus a broker calling into the market to secure the best execution and tighten the spread between the bid/offer price.

This is why many experienced clients opt for Killik, founded in 1989 by Paul Killik and Matthew Orr (020 7337 0400). Today it looks after £2bn for over 25,000 private clients through 12 offices. Each trade costs £30 (or two per cent on overseas securities and funds up to £25,000) but there is no minimum portfolio size to open an account.

Corporate bonds – notably Lloyds TSB 5.5 per cent 2016 and Provident Financial 7.5 per cent 2016 – are currently popular. The annual account fee (to include an ISA, SIPP etc) is £25.

The Share Centre was founded in 1990 and has over 160,000 share and ISA accounts (01296 414141). It makes no charge for expert advice by telephone. Its ‘practice account’ is an easy, risk-free way to try the stock market and improve investment skills.

Its experts provide the latest share and fund tips with a top 10 ‘buys’ and ‘sells’ on a daily basis. Share dealing costs one per cent online or by telephone subject to a minimum £7.50 with an administration fee of £2.50 plus VAT quarterly. A cash statement and valuation is issued six-monthly.

It’s also possible to deal in Eurotop 300 and US shares, such as BMW, CocaCola and Nokia.

Hargreaves Lansdown regularly wins awards for its broker services (0117 900 9000). It charges £9.95 per deal online or £15 by telephone (minimum one per cent, maximum £50), plus £12.50 quarterly management fee for frequent traders.

The range of investments includes AIM and PLUS (formerly known as the Ofex market). Non-US shares attract an extra £5. Its self-select ISA offers over 3,000 funds, shares, exchange traded funds, corporate bonds and gilts. An initial saving up to 5.5 per cent on over 2,200 funds can be obtained which means £587 could be saved if using the maximum ISA limit of £10,680.

Its SIPP has a free set-up and transfer service and no annual charge if cash and over 2,400 funds are selected or otherwise 0.5 per cent is charged, which is capped at £200.

Redmayne-Bentley is well-known in Yorkshire with offices in Beverley, Harrogate, Ilkley, Leeds and York (0113 243 6941). On the execution-only side, each equity trade costs £17.50 (valued up to £1,060) and at 1.65 per cent above that level to £7,000 with lower rates above.

Certification costs an extra £12.50 with annual ISA and SIPP fees of £60 and £100 plus VAT respectively. Extended settlement is available up to 20 days

Talos Securities operate Selftrade with a keen £6 per deal for those with 100 trades a quarter (or £12.50 online or £17.50 by telephone for lesser activity). There is one annual management fee of £35 plus VAT which includes three trades in the month in which the charge is raised (0845 0700 720). Selftrade will contact over 30 ‘market makers’ to gain the best price. Among the range of services offered is a SIPP account for a child.