Stock Broker Investments

How to Trust a Stock Broker with Your Investments

Before you allow stock brokers to make stock investments on your behalf, you must find verify their credentials and check references. You must believe that the stock brokers will act in your best interests, before you trust them to deal with your money.

As a stock investor you need to look for an investment broker who is right for you. Consider how much money you want to invest and the type of investments you want to make.  You also need to think about and how often you will be trading and how much help you need.

Licenses and regulations for brokers

Stock brokers must act in a reasonable manner, in keeping with the standards for stock brokers, which are clearly defined by the New York Stock Exchange (NYSE), the National Association of Securities Dealers (NASD) and other regulatory organizations.

A series 7 stock broker must pass the series 7 exam that is administered by the NASD. This exam qualifies a person to trade in all types of corporate securities, except commodities and futures. People, who pass the exam, are granted a Series 7 / General Securities License, which is required by any investment professional who communicates with retail investors.

Some of the professionals who require a Series 7 License are stock brokers, analysts, investment bankers and account managers. Anyone who practices without a Series 7 License may have to face severe financial and other penalties. It pays to confirm that you are dealing with a series 7 stock broker.

The NASD Public Disclosure program enables you to check the record of a financial broker or stock company and find out about any customer complaints, disciplinary proceedings, arbitrations or self-regulatory proceedings.

To protect yourself from stockbroker fraud, you can use the NASD BrokerCheck, a free online tool meant to enable stock investors to check the professional background of current and former NASD-registered securities firms and brokers.  You can use the NASD BrokerCheck to find out about the capabilities of a broker or brokerage firm.

You can claim compensation if you lose money due to stock broker malpractice. Stock broker fraud occurs when a stock broker or brokerage firm provides biased, inaccurate or incomplete information to attract business or to influence the market.

If you lose money due to intentional acts or negligence of a stock broker, you can file a malpractice lawsuit against the broker or brokerage firm.

You make the stock investing decisions

While dealing with a stock broker, never forget that you are the customer and you have to make the decisions. If you are uncomfortable with a stock investment proposal, you must tell your broker about it. If the broker does not respect your opinions and goes against your wishes, you need to look for another broker.

Good brokers will explain to you, in simple terms, why they think an investment proposal is right for you. If they cannot provide investment advice in terms that you can understand, you must stop dealing with them.

Remember that you are investing your own money in the stock market to become wealthy and you need to take every possible precaution to make sure that the broker is someone you can trust.

Before you entrust your money to a broker, talk to your relatives, friends and coworkers. Ask them to recommend a stock broker they have dealt with and found to be competent and trustworthy.

Ayna Miah

 

 

 

Posted in Uncategorized September 13th, 2007 by admin | No comments

How to Find a Stock Broker

It can be really difficult to find a good stock broker for your portfolio. After all, your broker should be completely tailor made for you and your needs. It is just like find the best tailor to make the best man suit designed for you to wear at your best friend’s wedding. Your stockbroker should be able to manage your portfolio and make profits for you as per your annual financial planning. He should be able to assess your budget, needs and your expectations and invest accordingly. On the other hand, he should be able to assess the market as well based on your needs and make wise decisions for investing your money.
It can be really tough finding a perfect broker for you. Prevent yourself from being misled by few abbreviations after the name tags on the business cards. Every one has a history and had experienced bruises in market race of Stock exchanges. All you need to do is to find out and stay away from those who are badly bruised. If you want to find a successful broker for yourself ask for references and check them out for example don’t shy away to make that important phone call. You can ask for two way references.

You can ask your friends and families for their recommendations or better still who they use personally and their performances. Alternatively, you can also ask a stockbroker for his references. It is better to exercise the first options as you have better chances of finding more believable and trustworthy replies to your queries.
When you are about to find a  broker, there are several things that you need to take into account and ask for the same from your stockbroker, if required. You should ask for his certification, his experience, licenses, etc. Get all the details about his commissions and fees or any flat fees applicable in case you render his services. It is important that you understand his approach to investing. This approach should be inline with your requirements and your own idea of investments. You need to stay away from a stock broker who wants to invest for quick returns when you are actually looking at long term returns.
The investment approach of him needs to definitely suit your approach and your financial planning. It is being like in marriage, if you and your spouse do not agree on planning your future, there would be no future at all. Similarly, if you and your stock broker do not mutually agree on nature and amount of investment, there would be either no investments or loss making investments. In the end, you would be the one who would stand as a loser as you would not only lose your money but would also need to pay for his flat fee or any commission charges. So always keep in mind this important aspect when you want to find a potential stockbroker.
Ask for his industry experience not only in trading of stocks but also his experience in your choice of industry. If you want to deal in computer stocks, he should have some background in the same. Similarly, if you are looking at infra structural stocks, it is wise to hire a  broker having some knowledge about infra structural companies and infra structural sector. Ask for his recommendations and check his recommendations with other competitors as well your friends or people who have already made investments. Lastly, drop by in his office to have a word with him. It would act as a simple background check on your part.


Posted in Uncategorized September 11th, 2007 by admin | No comments