Execution only brokerage account

MrEarl

All clients need a file and to comply with compliance obligations. Even the most basic client will take a number of hours to set up a file for. And when they are only making a few quid from it, what's the point? It will take a number of years to make a profit from this client. And given that these clients are looking for the cheapest platform, if one comes along that is marginally cheaper, they'll be gone.

There is also a cost for the technology, writing the programmes, maintaining it, hosting it etc. All has to be paid for.

Gordon

I don't think a compliance officer has ever dealt with a client. They rule the roost these days and their rules can be so inflexible as to really frustrate those who are trying to generate business.


Steven
www.bluewaterfp.ie
 
SBarrett said:
MrEarl

All clients need a file and to comply with compliance obligations. Even the most basic client will take a number of hours to set up a file for. And when they are only making a few quid from it, what's the point? It will take a number of years to make a profit from this client. And given that these clients are looking for the cheapest platform, if one comes along that is marginally cheaper, they'll be gone.

There is also a cost for the technology, writing the programmes, maintaining it, hosting it etc. All has to be paid for.

.....

Steven
www.bluewaterfp.ie
Click to expand...

Hello Steven,

Some of those costs that you refer to are fixed costs so won't change regardless of the number of clients. If the firm decides to be in the sector, it incurs the costs regardless. On that basis, if the firm has already invested in the technology etc. then it only needs to have the clients cover related variable costs and make even a small contribution to fixed costs, for those additional smaller clients to be worth having.

You talk about the most basic of clients taking a few hours to set up a file for, but I don't think it does if we are talking about an execution only stockbroking account. Much of the process is automated at any of the larger firms, while account opening also does not require senior (high rate) staff to be involved in all steps in the process, and there may be some economies of scale to consider too - as such, I think the the breakeven point is less than you may consider it to be (albeit, you may be considering other services rather than the execution only service that I am referring to and that will quickly explain our opposing views).

I take your point about some clients moving as soon as a cheaper platform comes along, but I don't think this applies to all. If it did, then all execution only customers would have left Goodbody and Davys for DeGiro by now, as an example. I think some customers are prepared to pay a premium (within reason) for a greater range of services, comfort in dealing with a firm they are familiar with or that may have a physical office in the same country, or that may be able to offer them other services they may be interested in at some stage in the future.
 
Anyone have experience of closing a brokerage account, and transferring securities to another broker?
What sort of cost is involved? They should be charging same as trading commission for such a service, right?
 
When I first started putting a bit of savings into shares I opened my account with TD Direct Investing now Interactive Investor in Ireland.

I like the way they work.

Then after a little bit I opened an account also with DeGiro... Wow!!! Even better...
 
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