Brokerage fees Australia: What is a brokerage fee?
20 Sept 2022No one want to pay more fees than necessary, especially when they can eat into your returns. So, that you can get the most from your money, here’s what you should expect to pay in brokerage fees.
Depending on the amount of money being invested, brokerage fees can form a large part of the overall share trading experience. With around 9.5 million Australians owning shares directly in 2021, attracting the custom of online share traders can be big business for brokerage houses. It is a competitive marketplace and investors are befitting from better – and cheaper – online share trading platforms. But before we dive into what you should expect to be charged, let’s look at what a brokerage fee is.
What is a brokerage fee?
A brokerage fee is charged by brokers and online share trading platforms to process that transaction (i.e. the buying or selling of shares). The fee is often calculated based on a percentage of the total transaction or set as a fixed fee. Sometimes it is a hybrid of the two. There is a certain level of administrative work required to process the sale and transfer of investments to you as a buyer, so this fee is charged to facilitate this transaction. Regardless of whether you’re buying shares online or at a full-service broker in person, you will likely pay a brokerage fee as the cost of doing business. Brokerage fees aren’t exclusive to the investment industry with a wide range of fees charged across the whole financial services industry for areas such as financial advice, real estate sales and insurance services.
| Provider | Fee for $15K trade* | Ongoing fees# | Trade with live prices^ | |
|---|---|---|---|---|
  |
 |
$15.00 | Yes | Yes |
 |
|
$7.50 | Yes | Yes |
 |
|
$14.98 | Yes | Yes |
View all Canstar rated Online Share Trading products. View Disclosures.
* Online brokerage fee for a $15,000 trade based on the number of transactions specified in the search inputs
# Ongoing fee for the account. There may be waivers and discounts subject to account use
^ The ability to view and trade on live prices
What should brokerage cost me?
Online investment brokers are much cheaper than engaging a broker face to face, and this is the least expensive form of brokerage fees for investing. The customer service is limited, so while you may not be paying for that personalised experience, you may find yourself instead, paying for the features that the platform provides. Canstar analysis reveals a decrease in trading costs of up to 15.55% over the past five years across the platforms surveyed.
A majority of the platforms will tier their fees based on the size of the trade or the trade value. The chart below illustrates the current average brokerage costs per size of trade in dollar terms.
Average Brokerage Fees 2022 by Trade Value
| Trade Value |
Average Brokerage 2022 |
|---|---|
| $1,000 | $14.67 |
| $5,000 | $15.27 |
| $10,000 | $16.28 |
| $25,000 | $24.04 |
| $50,000 | $45.17 |
| $100,000 | $91.68 |
Source: www.canstar.com.au 16/09/2022. Brokerage fees based on 1 trade per month. Averages are based on all products available on Canstar’s database for the specified date. Therefore, some changes in averages are impacted by a change in the products available in the market, as opposed to a change in pricing.
Related article: The Cheapest Online Share Trading Platforms
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How to save money on brokerage fees
The cost of brokerage is a fundamental element of online share trading and the good news for consumers is that the average cost per trade continues to fall for both high-value and low-value trades alike.
As the table below details, the average cost of placing a $100,000 trade has fallen by an average of just over $3.35 over the past five years, representing a decrease of 3.52%. The cost of placing a $5,000 trade has also fallen – more modestly in dollar terms (a $2.03 decrease) but more substantially in percentage terms (an 11.35% decrease).
Average Brokerage Fees: Change Over Five Years
| Trade Value |
Average Brokerage 2017 |
Average Brokerage 2022 |
Change over five years ($)* |
Change over five years (%)* |
|---|---|---|---|---|
| $1,000 | $17.61 | $14.67 | -$2.94 | -15.55% |
| $5,000 | $17.87 | $15.27 | -$2.03 | -11.35% |
| $10,000 | $18.65 | $16.28 | -$2.56 | -12.70% |
| $25,000 | $25.81 | $24.04 | -$1.77 | -6.85% |
| $50,000 | $49.00 | $45.17 | -$3.83 | -7.81% |
| $100,000 | $95.03 | $91.68 | -$3.35 | -3.52% |
Source: www.canstar.com.au 16/09/2022. Brokerage fees based on 1 trade per month. Averages are based on all products available on Canstar’s database for the specified date. Therefore, some changes in averages are impacted by a change in the products available in the market, as opposed to a change in pricing.
As the table illustrates, the biggest percentage discounts have been in the area of smaller-value trades. This is great news for Casual Investors because when you’re only investing a small amount, the fee represents a much higher percentage of your investment.
If you invested $1,000 for example, in 2017, you would pay on average a $17.61 fee representing a 1.76% cost of trade. With average brokerage dropping to $14.67, your cost of trade is now less than 1.46%. This reduces the amount by which your investment has to grow in value before you break even.
Different investor profiles will also face varying levels of fees based on how much and how often they invest. For example, Casual Investors don’t face an ongoing fee. But the Trader profile does pay an ongoing fee and it can be quite high because they are making 30 or more trades per month so their activity actually does require quite a bit of platform involvement.
To save money when it comes to brokerage fees, it pays to do your research and shop around. Integral to this is understanding what type of investor you are and how you plan to invest. For example, if you have $10,000 to invest, it may cost you less in brokerage fees if you were to invest in one transaction, rather than dollar cost averaging over a series of transactions. Your risk profile, goals and investment timeframe are essential to making a decision around the exchange platform you need and the brokerage fees you’re willing to pay.
Brokerage fees and exchange features
Brokerage isn’t the only factor to consider when deciding on a platform. While brokerage costs are always a relevant when choosing a trading platform, consumers also need to bear in mind their volume of trades, their personal experience, and which platform features may be appropriate to their needs.
Understanding yourself as an investor and what investors should look for in an exchange platform can go a long way in decision making. For further guidance, you can compare online share trading platforms, or view a snapshot below, to find out which trading platforms offer outstanding value for money.
Compare Online Share Trading Accounts with Canstar
If you’re comparing online share trading companies, the comparison table below displays some of the companies available on Canstar’s database with links to providers’ websites. The information displayed is based on an average of six trades per month. Please note the table is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical). Consider the Target Market Determination (TMD) before making a purchase decision. Contact the product issuer directly for a copy of the TMD. Use Canstar’s Online Share Trading comparison selector to view a wider range of online share trading companies. Canstar may earn a fee for referrals.
| Provider | Star rating^^ | Fee for $15K trade^ | Ongoing fees# | |
|---|---|---|---|---|
|
|
 |
$15.00 | N/A |
|
|
|
$15.00 | N/A |
|
|
|
$14.98 | N/A |
 |
|
 |
$0 | N/A |
View all Canstar rated Online Share Trading products. View Disclosures.
^^ Star ratings are awarded by research analysts based on an evaluation of price and features
^ Online brokerage fee for a $15,000 trade based on the number of transactions specified in the search inputs
# Ongoing fee for the account. There may be waivers or discounts subject to account use
Originally authored by T.J Ryan.
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This article was reviewed by our Content Producer Isabella Shoard and Sub Editor Tom Letts before it was updated, as part of our fact-checking process.
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