Brokers and platforms are usually keen for investors to trade and pay for investments online. But some investors still want to use cheques, receive contract notes for shares and deal over the phone, and one of our readers wants to know which brokers will enable him to do this.
He says: "I previously bought and sold shares via Saga Share Direct, but this service has changed since being taken over by Equiniti and I am no longer able to trade as before. My trading requirements are:
■ The ability to buy shares over the phone, pay for them by cheque and receive a share certificate.
■ The ability to receive a contract note and cheque for my sales.
■ No requirement to have a trading account."
The key issue here is receiving share certificates, as only a certain number of brokers offer this, but most do offer telephone dealing and many will accept cheques. Our reader is keen to receive certificates as this is one of only two ways to legally own your shares and appear on the share register. At least 30 UK brokers offer this service, including Hargreaves Lansdown, Interactive Investor and Charles Stanley Direct.
When it comes to paying by cheque, many brokers will allow you to do this. Exceptions include The Share Centre and Alliance Trust Savings.
Telephone dealing is also offered by most brokers, but it will ramp up your dealing charges. AJ Bell YouInvest's lowest online dealing charge for frequent traders - those who made 10 or more deals in the previous month - is just £4.95, but for dealing over the phone it charges £29.95. Hargreaves Lansdown charges a minimum £20 fee to trade by phone and TD Direct Investing charges its online share dealing rate plus an extra £40. Alliance Trust Savings also charges a higher fee for telephone dealing - £40 compared to £12.50 for online dealing.
You should always be able to receive contract notes when you make a deal in a certificated account as this is essentially a record of the deal you have made. In the case of buying, you will generally receive a contract note after the deal has been confirmed and subsequently receive a share certificate. However, brokers may charge you if you want to see a paper contract note rather than the usual online record.
Brokers are also less keen to pay you in cheque form and in many cases may charge.
No requirement to have a trading account
You will be hard pressed to get around the issue of needing an account to deal, even if you want to hold certificated shares rather than being put into a nominee account. It might be worth turning to the registrars (Equiniti, Capita, Computershare) of the company you own shares in as they will let you deal without opening an account. All the brokers and platforms we spoke to required investors to open an account in order to deal in certificated shares. This type of account does not generally levy annual fees like a pooled dealing account, but the costs of dealing are likely to be higher.
For example, at Hargreaves Lansdown certificated share dealing for UK equities is charged at 1 per cent for the first £10,000, 0.5 per cent for the next £10,000 and 0.25 per cent thereafter, subject to a minimum charge of £20. All certificated trades also incur an additional £20 charge. This means that if you wanted to buy £15,000 of shares you would incur dealing charges of £145, compared with a charge of £11.95 if the deal was placed via the Hargreaves Lansdown Vantage account.
Investors wanting to sell a share certificate do not generally need an account with a broker, and could also do this through their nominee account as a one-off transaction.
Brokers including Charles Stanley, Hargreaves Lansdown and Interactive Investor will allow you to trade over the phone, receive and send cheques, and receive contract notes. But the costs of trading in this way are far higher than for online trading.
There are also tax disadvantages to holding shares in certificated form as you cannot hold share certificates in an individual savings account (Isa) or self-invested personal pension (Sipp). For a full list of the advantages and disadvantages of certificated dealing see our recent feature 'Choose the right way to hold your shares'.
Sample of brokers and services offered
| Broker | Telephone dealing? Payment via cheque? Certificated share dealing? | Contract notes issued? Cheques for sales? | Need a trading account? | Certificated share dealing costs | Costs associated with phone and cheque (across dealing accounts) |
|---|---|---|---|---|---|
| Alliance Trust Savings | Y,N,Y | Y, N | Y | Dealing commission - 1% of the value of each deal, min £25 | £40 to deal over the phone, £20 to receive a one-off cheque payment |
| Interactive Investor | Y,Y,N* | Y,Y | Y | na | No additional charge to trade over the phone. £25 to issue a cheque |
| Killik & Co | Y,Y,Y | Y,Y | Y | Dealing commission of 1.65% for UK funds and UK equities (on the first £15,000 and 0.50% on the balance) plus £25 for a certificated trade and compliance charge. | No additional charge to trade over the phone. £10 to issue a cheque |
| The Share Centre | Y,N,Y | Y,Y | Y | Dealing commission of £25 minimum, deals up to £15,000 charged at 1.75%, 0.85% on anything over. | No additional phone dealing charge but reductions for online frequent dealing in pooled account |
| Charles Stanley Direct | Y,Y,N | Y,Y | Y | n/a | Min £25 per trade for phone dealing, 0.75% on first £10k, 0.25% over and 0.15% over £100k |
| AJ Bell YouInvest | Y,Y,N | Y, N | Y | n/a | £29.95 for phone dealing |
| Hargreaves Lansdown | Y,Y,Y | Y,Y | Y | Dealing commission of 1% on first £10k, 0.5% on next £10k and 0.25% over. £20 certificated dealing charge | 1% (£20 min £50 max) |
| Tilney Bestinvest | Y,Y,N | Y,N | Y | n/a | Charge of £37.50p. quarter for paper contract notes |
*Will turn electronic shares into certificates for £20 charge Y=Yes, N=No
Source: Investors Chronicle, product providers
