You will compare two brokers on cost, account type and licensing and choose the one you will open.
Nadia now has two fee pages bookmarked, two directory entries saved, and a slight headache. The app looks cheaper. The bank brokerage puts the ETF in her own name. She keeps flipping between the two tabs and changing her mind.
The way out is to put both brokers on one sheet, cost them for the way she will actually invest, and write the decision down. This exercise takes about 25 minutes. The figures below are Nadia's, and every fee in them is made up for the example, so use the real numbers from your own two brokers' fee pages.
Open a spreadsheet or take a sheet of paper and make two columns, one for each broker. Then add six rows: account type, commission, minimum fee, custody and other fees, funding method, and licence.
Fill each row from the fee page and the directory entry you found in lessons 1.2 and 1.3. Where a fee page is vague, write "ask" in the cell and send the broker a message. A blank cell is a cost you haven't found yet.
Nadia's sheet, with made-up fees, looks like this. Broker A is her bank's brokerage. It's a CDP-linked account, charges 0.12% with a S$10 minimum, has no custody fee, takes payment from her linked bank account, and holds a capital markets services licence. Broker B is the app. It's a custodian account, charges a flat S$1.50 a trade, has no custody fee but charges S$1 each time it collects a dividend, takes payment from cash she deposits in the app first, and also holds a capital markets services licence.
Exchange and clearing fees apply at both, so she leaves them out of the comparison. They don't change which broker is cheaper.
The course example is S$500 of an ETF every month for a year, which is S$6,000 in total. Work out what each broker would charge for those twelve orders, and add any yearly charges on top.
At Broker A, 0.12% of S$500 is S$0.60, which is below the minimum, so each order costs S$10. Twelve orders cost S$120, or 2% of the S$6,000.
At Broker B, twelve orders at S$1.50 cost S$18. Nadia expects her fund to pay a dividend twice a year, which adds S$2 in dividend fees. That's S$20 in total, or about 0.33%.
On cost alone, Broker B wins by S$100 a year. Before you stop there, try one more line. What would Broker A cost if you saved the S$500 each month and bought every three months instead? Four orders of S$1,500 each still hit the S$10 minimum, so the year costs S$40, about 0.67%. The gap between the two brokers shrinks from S$100 to S$20.
That extra line is worth adding to your own sheet whenever a minimum fee is doing the damage. Fewer, larger orders spread the same minimum over more money.
Now add a row called "what I give up". This is where you put the things the numbers don't show.
For Broker B, Nadia writes: shares held in the broker's name, dividends pass through the broker first, voting only on request, and a slower path to getting her shares back if the firm fails. For Broker A she writes: higher cost on small orders, and money has to be in her bank account by the payment date.
Be honest in this row. If you don't care about voting and you are happy with a custodian, say so. Lesson 1.1 made the point that either account type can be right. What matters is that you know which one you picked and what it cost you.
Look at the sheet as a whole and choose one broker. Then write one sentence that says why, in words you'd accept if you read it again in two years.
Nadia's sentence reads: "I'll open Broker A and buy every three months, because S$20 a year more than the app is a fair price for holding my ETF in my own CDP account." She also notes that she'll check Broker A's fees again in a year, since fee pages change.
If your two brokers come out almost level, pick the one that's easier to fund from the bank account you already use. A broker you can pay without friction is one you're more likely to keep using every month.
A finished sheet fits on one screen. It has two columns, the six rows filled in with real figures, a yearly cost for your monthly example, a row on what you give up, and one sentence naming your choice. Every number on it should trace back to a fee page or a written reply from the broker, so you could show it to a friend and they'd reach the same totals.
You have everything you need from the last three lessons. Build the sheet for your own two brokers, work out the yearly cost of your monthly example for each one, and then write the sentence.
Build the comparison sheet, calculate the yearly cost of your monthly example for each broker, and write down the broker you will open and why.
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