METHOD­OL­OGY

Financial Mail - Investors Monthly - - Cover Story -

THE STOCK­BRO­KER OF THE YEAR

sur­vey is con­ducted by In­tel­lidex, a spe­cial­ist fi­nan­cial re­search house.

This is the eighth year we have as­sessed SA’s re­tail stock­bro­kers. This year 21 firms par­tic­i­pated, with 6,117 of their clients com­plet­ing our on­line Peo­ple’s Choice sur­vey.

The struc­ture and na­ture of the sur­vey has been in­formed by our ex­pe­ri­ence, built up over past years, as well as feed­back from the stock­broking com­mu­nity and stock­broking clients. Over­all, we aim to blend quan­ti­ta­tive client feed­back with data pro­vided by the firms and In­tel­lidex an­a­lysts’ judg­ment where nec­es­sary.

The awards recog­nise firms in two main cat­e­gories: Top On­line Bro­ker and Top Ad­vice-Based Bro­ker. These two awards are com­ple­mented by an over­all award, Top Over­all Bro­ker.

There is also an award based on client feed­back, the Peo­ple’s Choice award, and we recog­nise the top bro­kers in con­tracts for dif­fer­ence (CFDs), a type of de­riv­a­tive, as well as tax-free sav­ings ac­counts.

We pro­vide as­sess­ments of which firms cater best for spe­cific client seg­ments. Fur­ther­more, we spec­ify which firms ex­cel in dif­fer­ent cat­e­gories, such as value for money and the range of in­stru­ments avail­able. Each of these has dif­fer­ent cal­cu­la­tion method­olo­gies, which we ex­plain be­low.

The re­search has three legs. First, a com­pre­hen­sive ques­tion­naire is sent to stock­bro­kers, ask­ing for de­tails of their prod­ucts, pric­ing and market po­si­tion­ing. Sec­ond, a mys­tery shop­ping and desk­top re­search ex­er­cise is un­der­taken by In­tel­lidex an­a­lysts to ver­ify in­for­ma­tion pro­vided and as­sess trans­parency and re­spon­sive­ness. Fi­nally, a ma­jor on­line sur­vey of re­tail stock­broking clients is done. Clients rank their bro­kers on nu­mer­ous as­pects. These scores de­ter­mine the im­por­tant Peo­ple’s Choice Award and feed into some of the other scor­ing cat­e­gories.

The Top Ad­vice-Based Bro­ker and On­line Bro­ker scores re­flect a com­bi­na­tion of In­tel­lidex’s views and client feed­back. The In­tel­lidex view gets a weight­ing of 80% and client feed­back con­trib­utes 20%, but the In­tel­lidex view is in­formed by both firm and client feed­back. For the Top Ad­vice-Based Bro­ker, the client in­put con­sists of rat­ings for ad­vice on in­vest­ment de­ci­sions and share­holder vot­ing; buy/sell rec­om­men­da­tions and re­search on in­stru­ments, and qual­ity of ser­vice for tele­phone-based trad­ing.

For the Top On­line Bro­ker, client in­put in­cludes ser­vice with IT queries, help with un­der­stand­ing the trad­ing plat­form, ease of use of the on­line trad­ing plat­form and ac­cess to data.

The Top Over­all Bro­ker award is in­formed both by client in­put and by an In­tel­lidex as­sess­ment. The as­sess­ment takes into ac­count cost of trad­ing, a mys­tery shop­ping ex­er­cise (which looks at the re­spon­sive­ness and trans­parency of a bro­ker), avail­able in­stru­ments and trad­ing tools, and client sup­port and ed­u­ca­tion tools. The client in­put is a con­sol­i­da­tion of the client in­put used for the On­line and Ad­vice-Based bro­ker cat­e­gory. Then we pro­vide an as­sess­ment of bro­kers that are suit­able for dif­fer­ent client types.

The Peo­ple’s Choice award is based on client feed­back on two met­rics: their over­all rat­ing of their bro­ker, and their re­ported like­li­hood of rec­om­mend­ing their bro­ker to friends or fam­ily. The top tax-free sav­ings ac­count provider is de­ter­mined from client feed­back.

The top CFD provider is also de­ter­mined from a mix of client feed­back and an In­tel­lidex as­sess­ment of the trad­ing costs and credit risk­i­ness of the provider. Client opin­ion on CFD re­search is con­sid­ered.

The method­ol­ogy will con­tinue to evolve as we re­ceive fur­ther feed­back.

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