METHODOLOGY

THE STOCKBROKER OF THE YEAR

THE STOCKBROKER OF THE YEAR survey is conducted by Intellidex, a specialist financial capital markets research house.

This is the ninth year we have assessed SA’s retail stockbrokers. This year 16 firms participated, with 6,380 of their clients completing an online client survey, representing a substantial sample of the market.

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

The awards recognise firms in two main categories: the Top Online Broker and the Top Advice-Based Broker. This division recognises the two main types of stockbroker and similar financial service providers that operate in the market and the types of services in which clients are interested.

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

We cover two types of firms: registered stockbrokers and registered financial service providers (FSPs) that offer stockbroking-like services. Registered stockbrokers tend to be older firms focused on personal relationships with clients. FSPs tend to be online- and execution-only and focused on derivatives such as CFDs.

Only registered stockbrokers are allowed to call themselves “stockbrokers” in terms of legislation, though it has become common usage to refer to everyone who supplies stockbroking-like services as stockbrokers. Because our priority is to provide a useful service to the public, for whom the difference is often irrelevant, we incorporate both registered stockbrokers and FSPs in our survey. 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 the information provided and assess the issues of transparency and responsiveness. Finally, a major online survey is undertaken of retail stockbroking clients. Clients rank their brokers on numerous factors. These scores determine the important People’s Choice Award and feed into some of the other scoring categories where relevant.

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, quality of fundamental

We aim to blend qualitative client feedback with data provided by the firms and Intellidex analysts’ judgment where necessary

research, recommendations to buy or sell, macroeconomic analysis, quality and service levels of telephone-based trading, advice on corporate actions and value for money. For the Top Online Broker, client input includes the aspects of 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 an Intellidex assessment. The assessment takes into account cost of trading, a mystery shopping exercise (which looks at responsiveness and transparency), 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: clients’ 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. Clients who have opened an account with their broker rate the ease of opening the account and the service they have received since doing so.

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. Better scores for risk are given for firms where the counterparty for CFDs is clear and has a large balance sheet. Small or obscure balance sheets receive lower scores.

The methodology will continue to evolve to stay abreast of industry changes and as we receive further feedback.