At our value investing clubs where we now have more than 1800+ members in the UK and in Europe, I often get asked about the best brokers for investing in shares, ISAs, ETFs, etc.  I personally do not use the usual stockbrokers in the UK; I buy futures with spread betting platforms for my investments.  Hence, it was not appropriate for me to recommend one stock broker over another.  

As an entrepreneur, I decided to change that, and I opened accounts with 9 brokers in the UK in Dec 2016 to experience everything from account opening to buying and selling a stock.  I deposited a total of £600 in five broker accounts and got back £460 at the end of the exercise.

Disclosure: CityFALCON and its stakeholders may have financial relationships with the companies discussed in this article.

Disclaimer: The right broker for you may depend on your personal profile, your investing / trading strategy, and many other factors.  Also, this exercise is conducted for our value investing club members who prefer to invest mainly in US stocks.  Please consult a financial advisor to decide which broker account is appropriate for your needs.

Comparing Top UK Stock Brokers – Overall Experience

  • Disappointing! I pulled my hair at times and gave up on a few brokers.  For the ones that I continued testing, the experience was not necessarily great, and also for most brokers, understanding the costs involved for transactions gave me a headache.  Anyway, I used my own not-so-sophisticated ranking process to identify the best of this lot, and below is the overall table with IG and DeGiro coming on top.  
  • My recommendation for IG is to de-link the share dealing account from the leveraged products such as spread betting and CFD to see a better uptake of their share dealing account.  In fact, given IG’s dominance in the leveraged products market, they might want to think about creating a completely different brand. 

  • While I registered at 10 brokers mentioned below, I didn’t end up continuing the review for the following brokers:
    • TD Direct Investing and AJ Bell required my proof of identity and address to be ‘certified to be a true copy of the original seen by me’ by a recognised authority.  
    • XO asked me to send documents by post though didn’t seem to require a certified copy (Seriously, in 2017 you want to me to run with manual documents when you could have checked these electronically like other brokers did).  
    • Saxo Bank and Interactive Brokers require high upfront minimum deposits, and I’d not like to do that until they allow me to check out the platform.  
    • BestInvest didn’t allow me to invest in US stocks.  
    • Hence we were left with 5 brokers to review in the end.
  • Some of the brokers want you to add money to the account even before you’ve started using the platform.  I don’t really like that
  • Sign up, KYC, etc seem too complicated and cumbersome for 2017. Hope the FinTech start-ups are listening.

The Selected Brokers

I selected the following 10 brokers; let me know if you’d like me to review another broker.

  1. Hargreaves Landsdown
  2. IG
  3. TD Direct Investing
  4. AJ Bell YouInvest
  5. Bestinvest
  6. GetStocks
  7. Saxo Bank
  8. Interactive Investor
  9. X-O
  10. DeGiro

As mentioned above, I ended up reviewing in detail only 5 out of the 10 brokers originally selected.

The ‘Onboarding’ and ‘Depositing Money’ Experience

Hargreaves Lansdown Hargreaves Lansdown

  • Opened HL Vantage Fund & Share Account.
  • Asked for debit card details very early in the process.
  • Very old school form filling process – it’s high time to change that!
  • For US and Canadian stocks, we are required to fill the W-8BEN form.  The form was pre-populated with my details but they did not accept a scanned copy of the signed form by email, and I had to send it by post (in 2017!).

IG IG

  • Clean and smooth onboarding process.
  • W-8BEN form could have been pre-populated like Hargreaves did but at least IG accepted a scanned copy of the signed form via email.

TD Direct Investing TD Direct Investing

  • Clean and smooth onboarding process
  • Asked for my debit card details very early in the process.
  • Required my proof of identity and address to be ‘Certified to be a true copy of the original seen by me’ by a recognised authority.  Sorry, I don’t have the time for this!

Best Invest 

  • It took me some time to figure out where to sign up for a new account.
  • Signed up for GIA.
  • I couldn’t trade in any US stocks, and so this account is not very useful for our audience.

GetStocks GetStocks

  • Good new-age site.
  • Authorised and regulated by Cyprus Securities and Exchange Commission (CySEC).
  • Didn’t ask for money upfront.
  • Strangely, they didn’t have a field to enter my Post Code.
  • Took 0.70% for depositing money from a debit card!  I believe that other brokers absorb this charge.
  • Asked for identity and residence proof, and I provided with scanned copies.
  • They didn’t ask me to fill the W-8BEN form.

Saxo Markets Saxo Markets

  • Access to all products in one go.
  • Asked for ID proof.
  • Didn’t ask for any money or card details up front.
  • Required minimum initial deposit of £7.5K and hence, I did not continue evaluating them.

AJ Bell YouInvest AJ Bell YouInvest

  • Good onboarding.
  • No cash requested in the process.
  • Required my proof of identity and address to be ‘Certified to be a true copy of the original seen by me’ by a recognised authority.  Sorry, I don’t have the time for this!

DeGIRO DeGIRO

  • Good onboarding.
  • Asked for Bank account details and sort code in the registration process.
  • Have had to add funds before I even see the platform.
  • Didn’t allow me to add funds with a debit card, and I had to manually transfer money via my bank.
  • Asked for NI number but no documents.
  • I found most forms and documentation in the form of online web forms which didn’t require any manual printing, signing and scanning/posting.  e.g.  the W-8BEN form.  What a relief!

X-O X-O

  • Simple onboarding.
  • Asked for sort code and account details up front.
  • Asked for identity and address documents to be posted to them. Sorry, I don’t have the time for this!

Interactive Investor Interactive Investor

  • I already had a deactivated account, and just needed to activate it again. I remember the process to be straightforward.

The Stock Buying and Selling Experience

I bought Twitter shares on the web from all the selected brokers and then sold the same shares from their mobile platforms. Overall it took me a while to figure out the total costs involved including the foreign exchange conversion costs.

Some broker specific observations:

  • IG required to pay to access price feeds to be able to execute the trade. NYSE feed costs £1.20 per month.
  • Both Hargreaves Landsdown and Interactive Investor added a significant premium on exchange rates which increased the transaction costs.
  • Interactive Investor debited the account with a £20 quarterly fee before even I started trading.
  • DeGiro had the cheapest transaction cost at £0.44

You can see the costs of executing the trades by each broker in the tables below:

Bought Twitter shares on NYSE

Note: To remove any doubts, the lower cost per share in the table below is better for you.

Sold Twitter Shares

Note: To remove any doubts, the higher price per share in the table below is better for you.

*shares were sold on a different day when the Pound was stronger, and hence the price per share is lower.

Tracking Portfolio & Research

Most brokers seem to be execution only and don’t necessarily provide much information about stocks in your portfolio.  I didn’t see much relevant and timely info on Twitter at any broker.  We at CityFALCON provide access to personalised news through our API here. 😉

Broker specific information is below:

Hargreaves Lansdown Hargreaves Lansdown

  • Basic info tracking about the stock that I bought (Twitter) – delayed feeds, ok UI, a good section on ‘directors deals’, not much news, no financial data.
  • They seem to send out interesting research via email though

IG IG

  • Reasonable tracking of stock – live price feeds (for which we paid), broker ratings, news from Reuters, and basic fundamental info about the stock.

GetStocks GetStocks

  • Basic news and data, and redirected to the stock information page on the relevant exchange.

DeGiro DeGiro

  • Mainly charts.

Interactive Investor Interactive Investor

  • Latest news from a month old, no fundamental data, difficult to use charts.

The Mobile App Experience

Mobile apps were generally ok with IG having the best experience.  Surprisingly, Hargreaves Landsdown didn’t allow me to sell my Twitter shares from the mobile app.

The Withdrawing Money Experience

Withdrawing money was straight forward except in the case of Hargreaves Landsdown that required me to either keep a minimum £50 in the account or close the account.  I don’t like companies holding onto my money, so I closed the account.  This was the exact message “In order to keep your account open you must maintain a balance on your account of £50.00. If you wish to continue we will close your HL Vantage Fund & Share Account and send you the proceeds of the withdrawal, less our account closure fee of £25.00 + VAT. If your balance is under £25.00 + VAT, this will be taken as the account closure fee.”

Pricing

DeGiro was the clear winner with the lowest pricing followed by GetStocks and then the bigger brands of IG, Interactive Investor, and Hargreaves Landsdown.  Comparing us to some of the other major countries, the transaction and management costs in the UK seem quite high, and I’m waiting for FinTech companies to disrupt the market soon.

Summary

If I were to regularly use a share dealing account, my preference would be IG or DeGiro; IG mainly for the experience, while DeGiro for the pricing and simplicity of the platform.  I’m hoping that the other platforms will keep consumers at the heart of innovation and improve their platforms and the user experience significantly.  If you’d like me to review more brokers, or correct any information above, please add a comment below.