When hunting out the broker or trading services provider that’s right for your investment plans, you’re likely to come up against a key issue: should you go for a paid-for service, or not? It’s definitely true to say that free at the point of use brokerage services can offer a way into the trading sphere, they’re certainly not all they’re cracked up to be, and opting for them could end up being a false economy.
But it’s also the case that paid-for services can provide an extra layer of strong service and may even be cheaper in the long run. This blog post will delve into the world of paid-for brokers and trading services in more depth and explain why it might well just be the right choice for you – especially if you want that added level of positive experience.
One of the benefits of going for a pay upfront broker or opting for a paid-for level like the eToro silver tier is that they can potentially offer you a better service. Take the example of leverage ratios. By paying more in fees to access the service, you may be offered a package of trading conditions that are far superior to comparable free accounts.
With sign-up fees flowing in, your broker may, for example, feel more confident offering higher leverage rates that could increase your profit (although also, of course, your loss). Paying a fee to use the broker’s service might also mean that the spread fees you are charged can be reduced somewhat, too.
Support And Advice
Paid-for brokers can often also offer additional advice and support – even tailored account management and trading packages. That is because the cash flow is there from subscription and usage fees to pay staff who can in some cases fulfill all or some of the functions formerly offered by stockbrokers.
They may be able to advise you on which stocks or other financial instruments to buy, for example, or at least be able to talk you through account types, risk management tools, and more. In some cases, this might also allow you to access a personal analyst. That is ideal if you don’t like the prospect of doing the technical and fundamental analysis yourself. It’s possible at some brokers to use services like these too, in essence, become a passive trader if you so wish.
Is Anything Ever Free?
Finally, it’s also worth facing an upfront fact. While so-called free accounts might not charge you to sign-up, they’ll still charge you somewhere along the line. Brokers are, after all, private businesses with profits to make, staff to pay, and servers to run – and they don’t provide the services for nothing. Where exactly in the process they impose a charge can vary depending on the broker in question. In some cases, the broker might charge you very high fees for leaving your account empty. Other brokers may charge you higher spread fees, meanwhile.
But the point is the same: at some stage in the business model, there will be a monetization element. If you take out a free account, you should ensure you work out what the cost of using it will be with all fees and charges considered. It may well be the case that paying for an account at a broker with a pay upfront business model might be cheaper in the long run – so don’t discount it.
A Word Of Caution
It’s important to say, though, that not all paid-for brokers offer all of these services – or, indeed, are legitimate providers. Sadly, some unscrupulous brokers do charge for their services, and you need to commit yourself to performing your usual due diligence and other checks before proceeding. If something doesn’t look quite right about a paid-for provider, you should trust your instincts, ask questions, and only proceed if you’re fully satisfied.
In short, paid-for brokers can sometimes offer a better package of services. They can, for example, provide tailored advice and support, while they may also be able to improve trading conditions and provide better leverage, and so on. And provided you exercise the same due diligence you’d use for any other broker; it could well work out profitable for you to go for a broker who charges you fees upfront.
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