How to Choose a Broker in Australia: A Beginner's Checklist

🤔 Why your broker choice matters more than you think🔗

🎯 The essential: Fees compound against you the same way returns compound for you. An extra 0.5% lost on a dozen trades a year, over a decade, is real money that never got the chance to grow.

Beyond the fee on each trade, your broker determines who legally owns your shares, which products you can actually access, and how painful it is to move platforms later if your needs change. None of that shows up on a fee comparison page, which is exactly why it's worth working through before you sign up, not after.

💵 1. Brokerage fees per trade🔗

Brokers charge one of two ways: a flat fee, a fixed dollar amount per trade, or a percentage-based fee, a small percentage of the trade's value. Which one costs you more depends entirely on how much you're trading at a time.

On small trades, a flat fee hurts more. On large trades, a percentage fee can end up costing more. Work out your likely trade size before comparing brokers, not after. Some platforms now offer $0 brokerage on ETF trades too, so it's worth checking current pricing directly on any broker's website rather than assuming a fee applies at all. As a rough rule of thumb, brokerage should sit under 0.5% of your trade size, no more than $2.50 on a $500 trade.

💱 2. FX fees for international shares🔗

🎯 The essential: The FX fee, not the brokerage fee, is usually the biggest hidden cost on international trades.

If you're buying US or other international shares, you'll pay a currency conversion margin on top of brokerage, this is the fee most beginners miss entirely. It typically sits somewhere well under 1%, though the exact figure varies a fair bit by platform, so check it directly rather than assuming it's negligible.

It applies on both the buy and the sell, so the round-trip cost of an international trade can add up to more than the return you're chasing on a smaller position. Some platforms let you hold US dollars in your account to avoid converting currency twice if you're trading the same market repeatedly. On a $2,000 trade, even a modest FX fee can easily outweigh the brokerage itself, so it's worth adding to your comparison, not just the per-trade fee.

🏛️ 3. CHESS-sponsored vs custodial (nominee) structure🔗

CHESS-sponsored: you get a Holder Identification Number (HIN), and your shares are registered directly in your name on the ASX's CHESS subregister. You're the legal owner.

Custodial (nominee): the broker or a third-party custodian holds the shares on your behalf. You have a beneficial interest, you benefit from any returns, but you're not the direct legal owner on the share register.

This distinction is genuinely complex when it comes to what happens if a platform fails, and it's worth verifying the specifics with ASIC or Moneysmart guidance, or a licensed financial adviser, rather than taking any single article's word for it. As a practical trade-off though, CHESS-sponsored platforms typically charge more per trade, while custodial platforms are often cheaper, sometimes $0 brokerage. Plenty of experienced investors are comfortable holding long-term ETF positions on a reputable, well-capitalised custodial platform, but as a beginner it's worth understanding which one you're actually signing up for.

Quick check: look for the words "CHESS-sponsored" or "HIN" in a broker's product disclosure statement (PDS). If neither is mentioned, it's almost certainly custodial. For more on how share ownership works day to day, see how to buy shares in Australia.

📦 4. Product range🔗

Every Australian broker covers ASX shares and ETFs as a baseline, but from there, coverage varies a lot:

• International shares (US, UK, global). Not every platform offers these, so check if global exposure is part of your plan before you sign up.
• ETF-specific fee structures. Some platforms charge differently for ETFs than for individual shares, worth checking if ETFs are your main vehicle, which they are for most beginners. Once you've settled on a platform, see how to choose an ETF for what actually matters when comparing individual funds.
• Managed funds, bonds, options, CFDs. More advanced products you probably won't need as a beginner, but worth confirming availability if you think you might want them down the track.

📏 5. Account minimums and investment thresholds🔗

The ASX sets a minimum marketable parcel of $500 for your first purchase of any given security. Some brokers enforce this strictly, others allow smaller top-ups once you already hold the stock. On top of that, some platforms have their own account minimums, some require nothing to open an account, others expect $500 or more before you start.

Micro-investing apps sit in a different category entirely, pooling fractional shares so you can invest with as little as $5. They run on different structures, fee models and ownership arrangements than a traditional broker. They can be a useful way to start, just understand what you're actually using.

Not sure what trade size you're working with yet? The Investing Amount Calculator can help you land on a starting figure before you go comparing broker fees against it.

🖱️ 6. Ease of use and customer support🔗

• App and desktop quality. Can you place an order without second-guessing what you just clicked?
• Order types. At minimum, look for both market and limit orders on offer.
• Customer support. Australian-based, reachable, with sensible hours.
• AFSL. Every legitimate broker must hold an Australian Financial Services Licence. Verify it on ASIC's professional registers search, and walk away if a platform can't show a current one.
• Educational resources. Some platforms invest heavily in beginner education, worth a look if you're still finding your feet.

⚖️ CHESS-sponsored or custodial, which should you choose?🔗

There's no universally right answer, it comes down to a decision framework:

• Prioritising legal ownership clarity and mainly buying ASX shares? Lean CHESS-sponsored.
• Prioritising low cost and comfortable with a reputable, well-capitalised custodial platform? Custodial can work well.
• Investing in international shares? Custodial is often your only option anyway, since CHESS only covers ASX-listed securities.

🆓 What about "free" or $0 brokerage platforms?🔗

$0 brokerage is real, several Australian platforms now offer it, but it isn't free to run. Platforms that don't charge brokerage still need to make money somewhere, usually through:

• FX spreads. A wider margin on currency conversion, which hits international trades harder than it might first appear.
• Premium subscription tiers. A free plan that's genuinely limited, with the more useful features sitting behind a monthly fee.

Payment for order flow, where a broker is paid for routing your order a particular way, gets raised a lot in this conversation, but it's mainly a US practice. It isn't a normal part of how Australian brokers make money, and current arrangements between market participants here are restricted, so it's not something to assume applies to a local $0 brokerage platform.

None of this makes $0 brokerage platforms bad, some are genuinely excellent. It just means understanding the business model before you sign up, so you're not surprised by where the cost actually shows up.

✅ Your quick-decision checklist🔗

Run through these eight questions before opening an account:

• What's the flat or percentage brokerage fee for my likely trade size?
• Is there a minimum trade size or account minimum?
• Is the platform CHESS-sponsored or custodial?
• What are the FX fees if I plan to buy international shares?
• Does it offer the products I want, ASX shares, ETFs, international shares?
• Does it hold a current AFSL? Check ASIC's professional registers search.
• Is the app or platform easy enough for me to actually use?
• What does the PDS say about how my assets are held?

❓ Frequently asked questions🔗