Does anyone use full service brokers anymore

[epower]

With the price of the likes of ASB securities or Sharesies, is anyone using full service brokers these days?

Reading an old Martin Hawes book and wondered on the cost and benefits these days with so much information being widely available online

[SBQ]

In NZ, I doubt to see any reason why. Full brokers are still popular in the US (ie your Goldman, Fidelity, Schwab, etc) but for different reasons. They typically attract large HNW customers as those customers want action in IPOs where the discount brokers are generally exempted from participation in the primary markets. For any person with significant wealth in the NZ share market, wanting a full broker here, I doubt any IPO would be their main reason for choosing. NZX liquidity is small so anyone with 5 or 10 million that wants to squeeze 10% gain out of an allocated IPO can not simply do so by closing their position. Such large balances usually takes weeks to do and a lot can happen during that period.

On a different topic, how about those Naked Brands shares where the company all of a sudden wanted to be an EV maker (Cenntro - CENN)? Word I read is shareholders in NAKD had lost nearly 90% of their investment if you held since the meme stock craze over a year ago. This is what you get when you choose NZ companies.

[epower]

In NZ, I doubt to see any reason why. Full brokers are still popular in the US (ie your Goldman, Fidelity, Schwab, etc) but for different reasons. They typically attract large HNW customers as those customers want action in IPOs where the discount brokers are generally exempted from participation in the primary markets. For any person with significant wealth in the NZ share market, wanting a full broker here, I doubt any IPO would be their main reason for choosing. NZX liquidity is small so anyone with 5 or 10 million that wants to squeeze 10% gain out of an allocated IPO can not simply do so by closing their position. Such large balances usually takes weeks to do and a lot can happen during that period.

On a different topic, how about those Naked Brands shares where the company all of a sudden wanted to be an EV maker (Cenntro - CENN)? Word I read is shareholders in NAKD had lost nearly 90% of their investment if you held since the meme stock craze over a year ago. This is what you get when you choose NZ companies.

Ok a lot to decipher there. Don’t really understand most of it.

Largely thinking of it because of analyst reports, sounding board of someone to run ideas past, etc rather than just reading annual reports and mulling over decisions on my lonesome.

[SBQ]

The key driving factor for most 'large figure' clients to go to 'full brokerage houses' is to get action on IPOs. These are new issue shares where traditionally, are reserved for best / high net worth clients. They offer the shares at a lower price before they go public on the stock exchange (netting an easy capital gain for merely doing nothing). The large brokerage firms do the 'underwriting' (the process of taking a private company and getting them to public on the stock exchange. Discount brokerage firms are simply not in that business.

However in recent years there's been a revolution of SPAC which is private $ used to acquire a company for the sole purpose of getting the company large enough to be listed on the stock exchange. Typically, part of the capital raising of a company had to come through underwriting, done by the broker, but with SPAC, that capital fund raising is done directly from private consortium groups. They can simply bypass the brokerage firms and list directly on the stock exchange, ie: Roblox (RBLX)

[kiora]

"Hidden Price of No-Fee Trading? $34 Billion a Year, Study Says"
https://finance.yahoo.com/news/hidden-price-no-fee-trading-160021808.html

[SBQ]

"Hidden Price of No-Fee Trading? $34 Billion a Year, Study Says"
https://finance.yahoo.com/news/hidden-price-no-fee-trading-160021808.html

Payment for Order Flow (PFOF) in these commission free trading brokers has well talked about in the past. While the retail investor assumes limit orders are what they are, the main brokers that don't rely on PFOF get better prices on equity trades. I know this as quite often, when I post a limit order of a large qty and amount, my broker often gets me a better price than what I set at limit. The article is saying that in this case, the no commission brokerage firm does NOT PASS ON those savings to their small retail customers but instead, pocket the difference on their limit order trades.

[ratkin]

With the price of the likes of ASB securities or Sharesies, is anyone using full service brokers these days?

Reading an old Martin Hawes book and wondered on the cost and benefits these days with so much information being widely available online

You can join them for the access to their research etc, but still make most of your buys at a cheaper broker. A bit like the way I treat the shoe clinic. Try on all the running shoes, then when I find a pair I like go and buy them for cheaper online.

They are useful too if you want to buy something on the unlisted market.

When I was fairly new to sharebuying I joined J.BWere. Went into the chch office, and decided I wanted to buy corporate investments (Montana wine). The advisor tried to talk me out of it, and suggested transrail instead. Luckily I did not listen and loaded up on the wine share. Did very well out of those.

Now days though, not sure there is much point for someone that is just beginning out. If you have a very large sum to invest then they are probably a decent idea, but otherwise it easier just to use ASB or the like.

[nizzy]

whats a large enough investment amount to justify a relationship with a full service broker like Craigs or Forbar? Is it a portfolio of $100k , $1 mill , $2 mill +?
Our sharebroker provides a good report every 6 months and does annual tax summary. He makes most of his money by charging 1% brokerage on every buy or sell. All up cost to us amounts to a few thou each year. Obviously more expensive than a self service ASB or sharieses, but I like the broker analyses and reassurance of a person to bounce thoughts off now and then. Is it worth it? I sometimes wonder, but on balance yes.

[Sideshow Bob]

Brokerage is also negotiable through "full-service" brokers, especially if have some sort of history/relationship with them. Still pay more than online DIY, but not a significant amount.

[SBQ]

whats a large enough investment amount to justify a relationship with a full service broker like Craigs or Forbar? Is it a portfolio of $100k , $1 mill , $2 mill +?
Our sharebroker provides a good report every 6 months and does annual tax summary. He makes most of his money by charging 1% brokerage on every buy or sell. All up cost to us amounts to a few thou each year. Obviously more expensive than a self service ASB or sharieses, but I like the broker analyses and reassurance of a person to bounce thoughts off now and then. Is it worth it? I sometimes wonder, but on balance yes.

It has been proven that these 'full service' brokerage firms provide sub-par performance than what the novice investor could do by simply buying the index ETF fund. Warren Buffet for many decades has proven this relationship.

From 2000 onwards, the great rush to discount online brokers came about to the retail investors in masses. Canada followed suit 10 years later however for NZ? I'm afraid the brokers here are very much like the Canadian brokers of the 1980s, charging absurd management fees for little benefit to their clients. If you go look at the brokerage scene today in America, pretty much all the major full brokerage firms have been decimated to the point that they scrapped all those ideas of charging 1% on the trades (like really, who in their right mind can charge 1% net ????).

But who am I to say? I'm a staunch supporter of owning stocks that pay no dividends in favour for NZ's no tax on capital gain; a concept even the brokers and financial advisers don't seem to understand because they don't explain taxation very well to all their clients. (they say go see a tax accountant... and that accountant may say you should get the dividends while you can as you never know if that NZ listed company will go bust).

Over 3 years ago I attended a Jarden seminar here in Christchurch. The guy was canvassing clients willing to invest $500K+ for them to manage. What a whole bunch of crockery. In NZ, attracting foreign investment is a problem despite houses (owned for more than 10 years) have no capital gains tax. So you don't see much of the international $ coming into NZ to build high rise apartments and hotels and such like you would see over in America. It's because of the same kind of NZ mentality.

[peat]

Couldn’t help but want to share this, and here is the perfect thread14172o