Stock broking becoming a favoured channel for high net worth individuals
Investing directly into the market via a stock broker is becoming a preferred method of investing by the more sophisticated investor, says Jan van Staden, CEO of Barnard Jacobs Mellet Private Client Services.
"Something we find clients appreciate is that all fees are transparent. Any brokerage charges and management fees are visible on your account unlike a pooled investment where you are not sure of the total costs that have gone against your investment" says van Staden.
Many stock brokers offer "execution only" services which is a platform for you to trade your own shares based on your own decisions. However when choosing your broker you need to recognise that not all brokers offer the same level of support for execution only services. Barnard Jacobs Mellet Private Client Services offers execution only clients full access to their website, as well as market updates and recommendations which are emailed to them daily. "Our website also offers access to our research, charting tools and live prices," says van Staden.
A quality broker also offers a full broking service, for an additional fee, where the client is able to discuss investment decisions with a fully trained broker, "Although the client makes the final investment decision they have someone to discuss the investment merits, someone to bounce ideas off," says van Staden.
For people who would rather leave the investment decisions to the experts, BJMPCS offers managed share portfolios. "We find that the level of transparency in going direct to market is very attractive to people who may not want to make their own investment decisions" says van Staden. In this case the client would have a qualified asset manager investing on their behalf, but the client would still have access to all the online capabilities as well as live price updates. "In addition to transparency and lower costs, the client has far more flexibility in tailor making their investment than a typical pooled investment. For example a director of a company can specify that his company's shares may not be included in the portfolio because he may already have high exposure to the counter through share options and also because there may be a conflict of interest in trading these shares," says van Staden. These portfolios are also ideal for drawing an income in the form of dividends.
Van Staden says stock broking has come a long way in the last ten years and quality stock brokers like BJMPCS have a full asset management team which works together researching shares and following an investment process to developing in-house share views which clients are able to benefit from.
Stock brokers are also highly regulated and have to adhere to strict processes to ensure the security of their clients' funds. In addition, BJMPCS implements its own internal rules to ensure fiduciary responsibility.
Van Staden says that BJMPCS is governed by the Securities Services Act, Financial Advisory and Intermediary Services Act (FAIS) as well as the Financial Intelligence Centre Act (FICA). As a registered stock broker BJMPCS is regulated by the JSE Rules and Directives. In addition, as BJMPCS provides asset management services, it is required to adhere to the provisions of the Pension Funds Act. "This creates a tight set of rules and regulations to which BJM needs to adhere in order to offer the best possible protection to our clients and their assets," says van Staden who adds that the company has sufficient insurance cover to safeguard the interests of its clients. BJMPCS is also a member of the JSE Guarantee fund which holds assets in excess of R80 million which protects against a member (stock broker) defaulting. A client can institute a claim against such member through the JSE Guarantee Fund. "As further protection all clients' assets are held in a trust account so their assets are protected against any action taken against the stock broker," says van Staden.
