How to choose the right share trading platform
With increasingly more South Africans looking to build personal wealth through equities, many first-time investors are learning that choosing a trading platform is not as straightforward as it seems.
In fact, the process can feel as confusing as online dating – full of promises and long-term commitments that often don’t live up to expectations.
To clear up the confusion, Wendy Myers, Head of Securities at PSG Wealth, shares practical guidance on what to look for in a trading platform, common red flags, and the trade-offs between cost and quality.
Wendy Myers
Think long term from the start
When choosing a platform, Myers urges new investors to think beyond their first few trades. “It’s expensive and admin-intensive to shift from one trading platform to another,” she says. “You should look at a platform critically to say, how’s this platform going to assist me in achieving my long-term investment goals?”
Myers advises starting with local shares, which are more familiar, but stresses that a platform should support offshore diversification as an investor’s portfolio grows. “When I say offshore, I don’t mean investing in dual-listed stocks on the local exchange, but being able to have exposure to those offshore exchanges – the LSE, the New York Stock Exchange – and then having a platform that also supports externalising that money.”
Must-have features to look out for
Beyond global access, Myers shares a checklist of features investors should look for:
• Order type control: Platforms should enable users to place limit orders rather than just market orders. A market order takes liquidity away from the market, whereas a limit order gives investors control over pricing and can significantly improve portfolio outcomes.
• Portfolio-based lending: Some platforms allow investors to borrow against their share portfolios, unlocking additional capital without triggering capital gains tax. This can be a useful tool during periods of market volatility.
• Dedicated support: A live trading desk or client support team can make all the difference, especially during corporate actions or market uncertainty.
• Interest on cash: Investors holding cash temporarily in their accounts should earn interest – even on small balances.
• Tax reporting: A comprehensive tax certificate that reflects gains, losses and dividends can save investors significant admin come tax season.
Red flags to avoid
While the front end of a platform may appear slick, Myers warns investors not to be blinded by bells and whistles. “Look critically at the research they provide, any support to the investor such as webinars and written educational content. When markets are volatile, you need well timed information to give you a bit of calmness.”
Another warning sign is limited transfer functionality. “Every platform should support you to be able to move your shares seamlessly,” she says, noting that local share transfers between JSE-registered brokers are straightforward, and investors should never be forced to sell shares in order to move them.
Another concern is poor transparency around fees. “Some platforms have a disclosure that allows them to charge you an inactivity fee and some charge an early settlement fee.”
Don’t underestimate the value of human support
While low-cost, app-only platforms may appeal initially, Myers says investors often come back to PSG after realising what’s missing. “Cheaper platforms tend to offer a lot more automation. But there will always be a time when something happens and an investor needs to engage with somebody, and that’s when they get stuck.”
She continues, “If you're looking to invest for the long term, I would look at a platform that can connect you with an adviser, because there will come a time when your investments are material, and you'll need an adviser to guide you along the way.”
Thinking of switching? Know what to expect
While changing platforms isn’t difficult, it does come with costs and time implications. Locally, share transfers between stockbrokers on the JSE’s common system are straightforward. Offshore transfers, however, can be slower and more complex.
“Once you've opened your account, the ease of funding it and the speed at which your money is reflected gives you a lot of comfort,” Myers said. “Obviously, when transferring between your old and new platform, there’s a cost involved, so be wary of that.”
Ultimately, choosing the right trading platform is about more than low fees or flashy features. It’s about aligning with a platform that can grow with you, support you through market cycles, and help you invest with confidence, also offering the human touch when you need it.
