How to Choose a StockBroker in India?
Since you are reading this article on how to choose a stockbroker in India, its sure that you are looking to enter into the world of stock markets! Top decision. If done correctly, investing or trading in stock markets can provide highest of returns than a lot of other market options. Nailing down on one particular stockbroker is more difficult than it may sound.
In order to choose a stockbroker for yourself, don't commit these 3 mistakes:
- Choose a stockbroker that is being used by your friends or family. Every investor or trader has different requirements and it is not one size fit all.
- Don't get influenced by advertisement campaigns, mostly those are gimmicks
- Don't completely trust the call you get from the broker executive, make sure you verify the facts and numbers stated.
1. Broker Types
Till 2010, whole stock broking space in India was pretty much uni-dimensional. All stockbrokers provided cohort of services to their clients and charged a percentage commission on each trade. Thus, higher the transaction value, higher you'd need to pay to the stockbroker. Such stockbrokers were called Full Service Brokers.
Make sure when you choose a stockbroker, Pricing is not everything but it is one of the important factors in deciding to go along with other important parameters. When we say pricing, it implies:
Account Opening charges
Annual maintenance charges (AMC)
Other Hidden costs
3. Range of Trading Segments
Different people like to invest and/or trade in different types of financial products including Equities, Commodity, Currency, Mutual funds, IPOs, NCDs, FDs and so on. Narrow down your preferred trading or investing products and check what different stock brokers have in store.
4. Funds Transfer process
If you open your demat account with a bank stockbroker (such as ICICI Direct, HDFC Securities), then it provides you with a 3-in-1 demat account and you dont need to worry about fund transfer everytime. However, if you open a demat account with a non-bank stockbroker (such as Zerodha or Angel Broking), then you'd need to transfer money everytime it dries out in your trading account.
5. Geographical or Offline Presence
A lot of times, one would like to meet in person with the stockbroker through its franchise or sub broker network. These discussions are generally towards getting a vibe of the portfolio or generic understanding of market behavior. This is where physical presence of the stockbroker in and around your region will come into play.
6. Performance of Trading Platforms
With the world converging towards digitization (especially India), online trading platforms are coming to the forefront in terms of the top deciding parameters for a stockbroker. Although, few stockbrokers still prefer to provide NSE, BSE based trading platforms to their clients (which is fine), but there are a few who are betting technology as the TOP driver of their brand.
7. Expertise of the Research team
Whether you are an investor or a trader, your expectation of an expert research team will always be there from the stockbroker. Especially a trader would seek advise every now and then so that he/she can go ahead and place orders accordingly.
8. Customer Service
When a choose a stockbroker, you need to understand that Customer service is more than just resolving administrative concerns. Customer service also includes:
- Complete resolution with lowest turnaround times
- Availability of customer service across multiple channels such as phone, email, chat, social media, bots etc
- Availability of customer service more as much time as possible across the day
- Customer service in multiple languages apart from just Hindi or English
- Structured escalation process in case of non-resolution of issues
9. Stock Broker's History and Reputation
Last but not the least by any means is to understand and know the market reputation and history of the stockbroker. Although we talk about discount brokers, most of them are recently established - thus, there will be very little less history. However, you can check out how such stockbrokers have evolved in their span, in terms of employees, daily turnover value, financial segments offered, number of active clients etc.
This was a small summary of the whole article, if you want to read the complete steps at length, you can check out this full-piece on How to Choose a Stockbroker in India that is Best for you?