The Internet serves as a good tool for investors looking to execute trades at their own time and convenience. The fees involved in online trading are also slightly lower than that charged by brokerage houses - investors pay about $25 for each online trade and about $30 for a broker-assisted trade.
That, however, has not undermined the importance of investors engaging brokers, according to Albert Fong, president of the Society of Remisiers (Singapore) and a remisier at OCBC Securities.
'Brokers are able to guide investors in making better decisions,' he said.
'For example, after investors buy (a stock), they need to know when to sell it. If it's a losing trade, they also need to know when to cut their losses.
'They may not know what's happening in the marketplace, but we're on the frontline, we hear what's going on in the marketplace and guide them along.'
Mr Fong describes brokers as the 'eyes and ears' of the market, citing Robert Kiyosaki, author of the bestseller Rich Dad, Poor Dad.
His views are shared by Terence Lim, a business student of Nanyang Technological University (NTU).
'A broker is someone I hope I can trust and seek advice from because he monitors the markets more in-depth than I do; he's my eyes on the market,' said the president of NTU's Investment Interactive Club who trades bluechip and commodity stocks.
'In the current generation, young investors are doing their own research. They want to apply whatever theory they've learnt to the market, do their own analyses, read reports, and trade. A broker gives them an added level of perspective.'
To start trading stocks in Singapore, investors are required to sign up with a brokerage of their choice.
The Singapore Exchange has a list of registered brokerage houses including DBS Vickers, OCBC Securities, Phillip Securities and Kim Eng Securities, among others.
Third-year accounting student Jason Low, whose interest in stocks was sparked when he was serving national service, said: 'You can sit in comfort and surf Google, but you don't get a sense of what's happening in the market. A broker can translate the sentiments in the market into emotions; from him, you can sense whether the market's going up or down.'
Engaging a broker comes with other perks as well. Mr Low, for example, didn't have to bid for initial public offering stocks as his broker - whom he knows 'quite well' - offered him placement stocks, he said.
With - in Mr Low's words - 'almost perfect competition' in the securities market here, in that there are many brokerage choices with competitive fees for small-time investors such as students, what ultimately determines an investor's choice is the relationship he or she has with his/her broker, investors and brokers said.
'A broker must be someone you can trust, listen to and seek advice from,' said Mr Lim.
'Certainly, there are many brokerage houses and platforms out there, but the most important thing is the relationship with the broker. That'll determine everything.
'For example, sometimes when I want to have a higher trading margin, only a trusted broker would give me that because I'm just a student. Secondly, in the case that I need to extend a margin for a few more days so that I can pay up later, again only a trusted broker will give me that.'
Mr Low, on the other hand, sees it more as a two-way relationship between the parties.
'(When) he gives you something, you've to give him something in return as well. So I devote my loyalty and commitment to him; we go out for coffee sessions and discuss stocks and the markets . . . I want to build up a life-long relationship with the broker so that it's a win-win process for both of us.'
This relationship-building inevitably takes time.
'The high level of mutual trust and bonding between the remisier and his clients can only be acquired over the years via the cultivation of positive long-term relationships,' said OCBC Securities' Mr Fong.
'Integrity is a very important quality for a remisier as he must put his clients' interest first.'
This article was first published in The Business Times on 7 July 2008.
