May 25, 2010
Stock Market How To Pick Broker
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The key to any relationship particularly when it comes to money is choosing someone you can trust. A stock broker is essentially your agent in charge of your money. The main role of a stock... |
The key to any relationship particularly when it comes to money is choosing someone you can trust. A stock broker is essentially your agent in charge of your money. The main role of a stock broker is to provide the investor with timely good advice on picking the right investment for you and your money.
A stock broker must be qualified to sell equities. In order to be certified the stock broker must be educated and pass state administered tests. Aside from the basic minimum qualifications a stock broker has a track record in his or her handling of stock portfolios.
A smart investor will ask the potential stock broker about his accounts for the past five years. Questions that require the stock broker candidate to discuss their investment strategy. What stock picks has he or she made that turned a profit. What stock picks did not show gains, but losses.
If the stock broker works for a brokerage house and most do, ask about the clients of the firm.
The stock broker is like any professional you would hire to perform a service. You are interviewing a candidate who will not only advise you on stocks and other investments, but someone who will take your personal welfare above all other considerations. Have a discussion with several candidates on the phone. The next step is to come up with a short list and have a personal meeting with the candidate stock broker.
There are regulations and government entities that regulate stock brokers in every state. There is arbitration remedies for damages you may incur if the stock broker has acted negligently in the handling of your account. These are bottom line safeguards. You want to pick someone who will never place you in that position.
In your selection process for a stock broker keep in mind the following points:
- A referral from a friend for a stock broker is useful, but not the final word.
- Hiring a friend that is a stock broker can be problematic if a disagreement occurs.
- From the first contact with the stock broker does he or she act attentive and return calls.
- Does the candidate stock broker ask you about your comfort level in investing.
- Does the candidate stock broker provide you with insight into his or her investment strategy.
- Does the candidate stock broker’s investment strategy coincide with your ideas about investing.
- Ask the stock broker candidate to explain limit orders and other means of protecting your investment.
Is the candidate stock broker forthright in telling you of in-house stock portfolios. Many brokerage houses have baskets of stocks they promote under the firms name. How has the firm’s stock package done over the past four quarters.
When the candidate stock broker is speaking to you does he or she gloss over information or do you get the impression it is a sales pitch. Every stock broker is a sales person, but there are limits in this field.
Finally, never make a decision on the spot. After your meeting face-to-face go home or back to your office and consider your choices. Pay particular attention to your gut reaction after you have left the meeting. Is this someone you trust to carry out your wishes and provide you with sound investment choices.
Recommended Reading
- Choosing A Broker
- What Does an Online Stock Trading Broker offer?
- How Stock Market Investing Works
- Benefits Of Using A Stock Broker
- The forex broker is a valuable advisor
