There was a time when the term ‘stockbroker’ was shrouded in a mysterious aura. The notion that you were ‘something in the City’ gave the members of the stockbroking fraternity (and it was definitely a fraternity) a certain status, even though most of the population were unaware what these strange creatures actually did.

But times have changed, and stockbroking in the 21st century has a very different profile. The business has undergone a dramatic transformation over the past two decades, beginning with the ‘Big Bang’, which ushered in the demise of the old distinction between ‘stockbroking’ and ‘stockjobbing’ and removed the notion of a fixed commission rate for all share trades – at a level that would seem exorbitant today.

Levels of service
There remains, however, a clear distinction between services provided to institutional investors and those aimed at private investors. Many of the major investment houses cover both areas, as indeed do many smaller brokers, but there also remain a number of broking firms who are focused on private client business. These are often regionally based firms, who emphasise personal service and developing a working relationship with their customers that larger organisations often find it hard to replicate.

In the following pages we look at three key aspects of the modern private client-focused broker: execution-only sharedealing, discretionary portfolio management and regional offices. The first two represent the opposite ends of the spectrum of services provided by private client firms. Execution-only services provide quick, efficient and, above all, cheap sharedealing for those investors who know exactly what they want to buy and sell, while a discretionary portfolio manager will agree an investment strategy with their clients at the outset and then make all subsequent decisions themselves, reporting back to the investor at regular intervals. Two very different types of service for different types of investor, but both key elements of what private client stockbrokers have to offer.

Local presence
The third aspect is often overlooked, but is increasingly important. Traditional private client stockbroking was based on the personal relationship between the investor and their broker, often on the basis of an advisory service, where the broker would make investment recommendations to the client, but the client ultimately made the final decision. Many brokers still provide these services, although they attract higher fees
as this kind of personal attention is more costly to provide than executing buy and sell orders or running a discretionary portfolio.

However, even those investors who have given their portfolio managers full discretion will want to have regular contact with them, and this is much easier to achieve if they are based in a local town or city rather than an office in London. Which is why, as our survey reveals, the regional office is making a comeback and a number of specialist private client firms have extensive networks of local offices throughout the country.

Making the right choice
It is, of course, important to remember that stockbroking and investment management are personal services and it’s important to have a rapport with the person who is giving you investment advice. Shop around to find the firm that both provides the type of service you are looking for and has staff that you feel you can trust, with charges that fit your pocket. The Association of Private Client Investment Managers & Stockbrokers (www.apcims.co.uk) directory will help you establish which firms offer relevant services and where they are based.

But, above all, it is important to realise that the modern stockbroker is not a remote creature in a pinstriped suit, but an investment professional who can help your portfolio to grow.