5 Important Questions Before Opening a Broker Account

Welcome to Financial Fluency - your weekly guide to mastering financial English, learning how money works, and making confident financial choices.

In this issue:

• A Look at the Markets: Tesla

• 5 Important Questions Before Opening a Broker Account

• Quote of the Day: Warren Buffett

• We value your feedback

• Word of the Day: Broker

• Interactive Quiz

• Whenever you are ready, here is how I can help you

A Look at the Markets: Tesla

It's been a volatile 12 months for Tesla, with huge gains after the US election in November 2024, and sharp reversals following US tariff announcements. Tesla is now approaching all-time highs again, up roughly 100% since April (I did not take this trade).

5 Important Questions Before Opening a Broker Account

Moving from research to action in your ETF investing journey

Moving from research to action in your ETF investing journey

When I started investing, I had to contact my broker by telephone.

Obviously, there were no apps, platforms or even internet. Communicating with a broker was expensive and slow. Now people can invest almost as easily as sending a text message.

In this newsletter we will examine 5 important things to consider before choosing a broker.

1. Reputation

We cannot forget that brokers are responsible for your life savings.

I like to choose an industry recognised broker with several years of trading and large amounts of assets under management. They should also be regulated in your geographic location (FCA in the UK, equivalent regulators in other countries). I check company reviews.

All this information is publicly available from internet searches.

2. Range of Products

There is no point choosing a broker that does not list the assets that you are interested in buying.

If you stick to recognised ETFs, you should be okay with most brokers, but it is worth checking before you open an account. This is particularly important if you decide to trade individual shares from foreign countries, but that is not the focus of these newsletters. Equally, if you decide on an ETF that is not listed by a major broker, that could be a red flag - many US ETFs do not have the correct authorisation to operate in Europe, for example.

Most brokers allow you to see what they list before you open an account.

3. Cost

Understanding broker costs helps you compare platforms effectively and protect your long-term returns.

The main costs to check include:

• Trading fees – typically €3–€10 per transaction for European platforms

• Account maintenance fees – some brokers charge monthly fees, even when you're not actively trading

• Currency conversion fees – if you're buying assets in different currencies (USD, GBP, EUR)

• Platform/custody fees – annual percentage charges on assets held with the broker

• Withdrawal fees – costs for transferring money back to your bank account

Some brokers now offer zero-commission trading for ETFs, which can significantly reduce costs for long-term investors following a buy-and-hold strategy.

4. User-Friendliness

I want all my computer equipment and software to be intuitive.

If you are simply buying and holding ETFs for the long term, you want your platform to be simple. Other investors trading financial products more regularly may want access to charting and news. If you prefer to monitor your investments regularly (not always a good idea!), you might want an app on your smartphone.

This is very much personal preference, so choose the features that suit you.

5. Tax Reporting

Simplicity has been a key feature of this ETF investing strategy, and tax reporting should be no different.

For that reason, you may consider a broker that offers automatic tax reporting in your country. This simplifies the amount of paperwork you have to keep, often over many decades. This may also save you money in accountancy fees.

Not all brokers offer this, but it may be worth researching the ones that do.

Conclusion

Do not get overwhelmed when choosing a broker.

In fact, when you get started, you may choose a couple of brokers to try before deciding on your main one. If you have a lot of assets, you may be more comfortable spreading them between more than one broker. Ideally, try to avoid changing brokers as selling and rebuying may trigger a taxable event (some brokers allow you to transfer assets directly without selling, though this isn't always possible and may involve transfer fees).

Next week, we will look at how these principles apply to real brokers.

As always, none of this is financial advice. Everyone should invest according to their personal circumstances, risk tolerance and financial goals.

Quote of the Day: Warren Buffett

This applies perfectly to broker selection - the cheapest platform isn't necessarily the best value. Sometimes paying slightly more for better service, security, or features delivers greater long-term value.

We Value Your Feedback!

Your opinion helps us improve and lets you suggest topics or ask Business English questions for future issues.

Word of the Day: Broker

Broker - noun - a licensed individual or firm that acts as an intermediary between investors and financial markets, executing buy and sell orders for securities such as stocks, bonds, and ETFs in exchange for a commission or fee.

Context and Usage: In modern investing, the term "broker" often refers to the online platform or brokerage firm rather than an individual person. Investors open accounts with brokers to access financial markets. The broker holds your investments in custody and processes your transactions. In Europe, brokers must be regulated by financial authorities to protect investor interests.

Note: The terms "broker," "brokerage," and "platform" are often used interchangeably in casual conversation, though technically a broker is the licensed entity while the platform is the technology interface they provide.

Common Collocations:

Open a broker account - create an investment account with a brokerage firm
Before you can start investing in ETFs, you need to open a broker account with a regulated platform.

Choose a broker - select which brokerage firm to invest through
Choosing a broker involves evaluating reputation, costs, and the range of products available.

Online broker - internet-based brokerage platform
Online brokers have made investing accessible and affordable for ordinary investors worldwide.

Regulated broker - brokerage firm authorized and supervised by financial authorities
Always verify that your broker is regulated by recognized authorities like the FCA or equivalent in your country.

Business Example:
The company pension scheme uses a regulated broker to manage employee investment contributions and provide access to a range of ETF options.

Investment Context: Traditional brokers required phone calls or in-person meetings and charged substantial commissions. Modern online brokers have democratized investing through user-friendly platforms, lower costs, and instant trade execution. However, the broker's core function remains the same: providing secure access to financial markets for individual investors.

Interactive Quiz

Whenever you are ready, here is how I can help you:

We provide Business English lessons and Cambridge and IELTS preparation courses.

You can book a free 20-minute consultation with Iain over Zoom here:

Why not subscribe to our sister Business Fluency newsletter? It helps English students master essential business terms and provides practical strategies to boost your career prospects.

Disclaimer:

This newsletter is for informational and educational purposes only and should not be construed as financial advice. The information contained herein is generic and does not take into account your individual financial circumstances. You should always consult with a qualified financial professional before making any investment or financial decisions.

Additionally, the authors and/or publishers of this newsletter may hold investments in securities or other financial instruments mentioned herein. These are included for illustrative purposes only and should not be taken as a recommendation to buy or sell such securities or financial instruments.