How to Find the Best Stockbroker in Kenya [11 Tips From Experts]

The right stockbroker can be the difference between making or losing money when buying stocks in Kenya. To use the stock market to grow your wealth, you need a reliable stockbroker.

A stockbroker is simply someone who buys and manages stocks on your behalf if you don’t want to go through the hassle yourself. So, since you will be trusting your investment on someone you probably don’t know, you need to ensure that they are reliable, trustworthy and know what they are doing.

So, if you are new to buying stocks in Kenya, here are some tips you can use to find a reliable brokerage firm that will help you grow swiftly in the stock market.

The first step is to know what you want. A stockbroker is a mediator between you and the world of stocks. There are brokers who focus on one sector, such as agriculture, technology, or banking. You should know what sector interests you and find a broker whose specialty matches your interest.

For instance, if you want to buy stocks in companies that deal with insurance services, healthcare, and such, you should find a broker who specializes in that sector.

However, if you are not sure about the kind of stocks you want to buy and let the broker choose for you, then it is best to find one that has knowledge of a wide variety of stocks.

The charges will depend on the broker, so do your research. Some stockbrokers in Kenya will charge you a flat fee per transaction, while others will take a percentage of returns after deductions for their fees.

The latter is usually much more expensive than the former when starting out. So ask questions and determine how much it will cost you when buying stocks in Kenya through a broker.

Most financial industry players, including brokers, must work for at least five years before starting their own companies. However, there are some who manage to get around this rule by making their companies branches of other companies, which are registered abroad.

If the broker is very young but has a lot of experience, chances are he or she is either working for another company or has stolen client data to use as their own. So it’s best to check out the firm’s registration and find out how long they’ve been in business before choosing them to be your broker.

Just because a stockbroker is well established doesn’t mean you won’t lose money if they are not performing up to standard. Find out how much clients are making after fees, since brokers usually have some hidden charges that cut into the profits their customers should be making.

If most clients are making a lot of money, then the broker is probably doing something right.

Honesty may not seem like it has much to do with buying stocks in Kenya, but you need an honest stockbroker more than ever when dealing with such a volatile market. You never know when your broker could give you the wrong advice and leave you with many losses.

So, look for trustworthy brokers that can help you prosper. Ask if they’ve ever been involved in any fraud cases and check out their ratings before trusting them with your money.

When looking for the best stockbroker in Kenya, go online and find out what people say about the firm. Check their ratings and reviews on consumer websites and read through them to see if they mention any shady business practices.

You can also check their social media pages to see what kind of posts they’re putting up. Are they informative or just promotional? If they are more promotional than informational, keep looking.

Before you sign a contract with a stockbroker, you should read the fine print to know how much they’re going to charge you in fees. Check if the charges are flat per transaction or a percentage of your total profits after deductions.

Never sign a contract you haven’t probably read and understood. There might be things that will affect your investment in the long run because you didn’t understand them. So, if you can, read and re-read the contract before signing it.

Better yet, consult someone who understands the stock market better to help you go through the fine print.

Before you work with a broker, ensure they are licensed and approved by the Capital Markets Authority (CMA) and the Nairobi Securities Exchange (NSE). Otherwise, your money might not be safe, and you won’t be able to get it back.

You should also check if the broker has any pending cases of fraud or if they have ever been involved in financial scandals. You can easily find this information online, so there is no reason why you shouldn’t do this.

If you are going to work with a broker, knowing their company history is not the only thing you should consider. You should also know how well your personalities mesh. 

Do you feel comfortable talking to them? Are they there when you need them? Will they listen to your concerns and suggestions, or will they always push their own agenda?

Also, consider if you’re going to be able to trust them. If they always seem busy, how likely is it that they will be able to provide you with all the services you need?

No matter how sweet-talking or knowledgeable the broker appears, don’t take their word for it. Take some time off to do your own research to be more confident when deciding which stocks to buy.

There are many sites that will offer valuable information on how the market is doing and what might affect it in the future. Armed with this knowledge, you can make better decisions on buying stocks, even if that means not going with the best stockbroker in Kenya.

Don’t jump on the first stockbroker you find. Make sure you compare different brokers to get the best service and terms. You should consider costs, additional fees, user-friendliness, and other factors.

To ensure you get the best deal possible, try talking to several brokers before deciding which one will serve you better. Also, find a trusted source you can go to for additional advice and information, especially when the going gets tough.

The key is to make a good decision from the start so that you don’t wish you had gone with someone else later on. Do your research now and find out which stockbroker would be best for you.

The bottom line

Finding the best stockbroker in Kenya is more than looking for someone legally allowed to do business. You must know their reputation, registration stage, availability, trustworthiness, and how well you get along with them before signing anything.

After studying the market and comparing different brokers, choose carefully to ensure your money is safe and secure.

Which tips to you use when looking for stockbrokers in Kenya? Let us know in the comments.