How to Choose a Broker (What to Look For)

Knowing how to choose a broker starts with safety, not features: confirm the firm is registered with your country's regulator and covered by the right protection scheme, then compare costs, account types and ease of use. The "best" broker is simply the regulated one that's cheapest and simplest for the way you'll actually invest.

This guide is a checklist, not a ranking. We don't recommend or rank specific brokers or platforms. Instead, it shows what to look for and where to verify it, with notes for the US, UK, Canada and Australia. It's part of our guide on how to start investing.

What is a broker, and what types are there?

A broker is a licensed firm that holds your investments and places your buy and sell orders. Beginners usually choose between a few types.

ASIC's Moneysmart notes that most Australians who buy shares use an online broker, and that full-service brokers charge more because advice is included.

Step 1: Is the broker regulated and protected?

Only use firms authorised by your country's regulator. It's the single most important check.

• US: search the firm on FINRA BrokerCheck, a free tool showing registration, history and disciplinary events. Confirm it's a SIPC member; SIPC protects up to $500,000 per customer, including a $250,000 limit for cash, if the firm fails.
• UK: check the FCA's Firm Checker by going directly to the FCA website. Ask whether the FSCS applies; investment protection is up to £85,000 per eligible person, per firm.
• Canada: search CIRO's directory of regulated firms and its AdvisorReport. CIPF covers up to $1 million per account category, such as general accounts and registered retirement accounts, if a member firm is insolvent.
• Australia: brokers must be licensed. Use ASIC's resources and read the broker's disclosure documents to understand how your shares are held.

None of these schemes protect you against market losses. They deal with firm failure and missing assets.

Step 2: What will it really cost?

Compare total costs for your own pattern of investing, not the headline "zero commission".

The SEC's fee bulletin explains that fees come in two types: transaction fees each time you buy or sell, and ongoing fees you pay regularly even if you don't trade. Watch for:

• Commissions or brokerage fees per trade. In Australia, Moneysmart notes that most online brokers charge a flat fee for smaller trades, often around A$20 or less as of 2026, switching to a percentage for larger trades.
• Account, platform or custody fees, sometimes a percentage of your balance (common with UK platforms).
• Fund costs (expense ratio or ongoing charge) for the funds you buy.
• Currency conversion fees when buying overseas shares.
• Inactivity, transfer-out and account-closure fees.
• Interest on uninvested cash: what the broker pays you, if anything.

Example (hypothetical): a platform charging a flat $5 a month costs $60 a year. On a $1,000 balance that's 6% a year; on a $20,000 balance, 0.3%. Flat fees hit small accounts hardest, which is why how to invest with little money puts so much weight on costs.

Step 3: Does it offer the accounts and investments you need?

The right account wrapper can matter more than a small fee difference. Check the broker offers what you'll use:

• US: taxable brokerage, traditional IRA, Roth IRA, and possibly rollover IRAs from old 401(k)s.
• UK: stocks and shares ISA, SIPP, general investment account, and possibly a Lifetime ISA if you're eligible.
• Canada: TFSA, RRSP, FHSA and non-registered accounts.
• Australia: individual brokerage accounts; super is held separately with your fund.

Then check the investments: broad index funds and ETFs, fractional shares if you'll invest small amounts, and automatic regular investing. The SEC notes that not every broker offers fractional shares, and they generally can't be transferred to another broker. If you're planning to use index funds, see index funds for beginners.

Step 4: Is it easy to use and to leave?

For beginners, clarity beats advanced tools.

• Clear display of fees, holdings and performance.
• Simple order entry with limit orders available.
• Reliable customer support and security features such as two-factor login.
• Readable statements and tax documents.
• A straightforward process to transfer out if you change your mind.

Trading features like options, margin and real-time charts aren't a plus for most beginners. Some applications even default to margin, so choose a cash account when you open a brokerage account.

How do brokers make money, and why does it matter?

Every broker earns money somehow, even when trades are advertised as free. Knowing how helps you spot the costs you don't see on the homepage.

Common sources include trading commissions, account or platform fees, currency conversion charges, lending facilities such as margin, and the difference between the interest earned on your uninvested cash and what's paid to you. None of these is automatically bad, but they shape what a firm has an incentive to promote.

The SEC's fee bulletin suggests reading the disclosure documents, asking the firm to explain every fee you'll pay and how it gets paid, and checking your statements. In the US, the firm's Form CRS relationship summary is a short document designed for exactly this. Elsewhere, look for the key information documents and fee schedule.

Should you use more than one broker?

Most beginners don't need to. One regulated provider that offers the accounts you need keeps things simple. People sometimes add a second provider later, for example when their workplace plan is with one firm and their IRA, ISA or TFSA is with another. More accounts mean more statements, logins and fees to track, so add one only when it clearly does something the first can't.

What are the red flags?

Walk away if you see any of these. Several come straight from the FCA's scam warnings; the rest are common-sense checks:

• The firm isn't on the regulator's register, or it's a "clone" using a real firm's name with different contact details.
• Promises of high or steady returns with little risk.
• Pressure to deposit quickly or bonuses for acting fast.
• Contact out of the blue by phone, social media or messaging apps.
• Requests to pay by crypto, gift card or transfer to a personal account.
• Vague or missing fee information.

A quick broker checklist

Run any broker through these questions before you open an account.

1. Is it on the regulator's register (BrokerCheck, FCA, CIRO, ASIC)?
2. Which protection scheme applies, and up to what limit?
3. What are all the fees for how I'll invest?
4. Does it offer the tax-advantaged account I need?
5. Does it offer low-cost diversified funds, fractional shares and automatic investing?
6. How does it handle uninvested cash?
7. What does it cost to transfer out?

Investing involves risk, including loss of principal, and past performance does not guarantee future results.

Next steps

• Ready to apply? Follow how to open a brokerage account.
• Avoid the traps in beginner investing mistakes.
• Learn the whole process in our beginner investing guide, and if you're still building savings, start with how to save money.
• Or explore our guide to making money online.