What to Look for in a Brokerage Firm
In order to choose a brokerage firm that is right for you it is essential that you do some homework. The first thing that must be done is to ask yourself some questions about your finances, needs and investment plans.
Before you start looking for a broker dealer you need to decide how much money you have available to invest. The amount of funds you have available could help you to narrow down your list of potential firms later on. If you do not know much about investing you might want to consider using one of the full-service brokerage firms as opposed to hiring an independent broker dealer who may only offer you very limited advice. The large full-service firms are ideal to use if you have a substantial amount of money to invest. If you decide to take this route, be sure to research several firms to see what each offers. Jot down the fees and commissions charged by each and then make your decision based on the criteria that is important to you.
Be sure to ask any broker dealer you are interested in using how long they have been in operation. It is always best to go with a well experienced firm. With any firm you are considering using be sure to ask about the marketing methods used. Also, take the time to talk to financial consultants of the company and even consider visiting the broker’s headquarters. If at all possible, have a talk with people associated with the broker dealer to see if they fit your needs. Ask acquaintances, family members and work associates for the names of brokerage firms who they have used. This reference checking should include looking at the reputation of the management team, the experience of the support staff and the goals of the consultants working in the firm.
The broker dealer you hire should be backed up by a good clearing firm that has a great reputation for providing outstanding service. Do some homework and check to see if the clearing firm used is trusted and that it has the resources available to be able to provide top-rated support services.
Keep in mind the fact that most consultants choose an independent broker dealer to attain a high level of autonomy for their business. You should consider contacting representatives of the broker dealer to see if they allow for the flexibility that gives consultants a reasonable level of independence. Be wary of the broker who tries to sell you a product regardless if it is appropriate for you or not. Also be wary of the broker who does not provide you with a list of customer references including names and phone numbers.
It is essential to look at payout schedules, ticket charges and other costs so you can determine the true compensation potential of a broker dealer. Your broker dealer will most likely earn a commission based on the size of your investment so it is important that you fully understand these costs before proceeding. It is also essential that you are honest about your net worth and the money you have available to invest. The broker you hire will make investment recommendations based on your objectives and your net worth so do not attempt to impress the broker as he cannot do his job correctly if you are dishonest.
Lastly, be sure to contact the Financial Industry Regulatory Authority (FINRA) on its toll-free hotline. You can obtain important facts about brokerage firms by doing so. You can find out if the firm you are interested in using has any civil judgments involving security matters filed against it and also can see if the firm has any disciplinary proceedings pending before the SEC, FINRA or other organizations and states.
Processing your request, Please wait....
