How to choose an investment broker

A broker, also known as a “registered representative” or “account executive” is the one acting between a buyer and a seller.  Generally, brokers work for a brokerage or brokerage firm that actually handles the buying and selling process.  Brokers are merely “representatives” of a brokerage firm whom you can transact with. 

There are various types of brokers – commodity, insurance, stock, investment, real estate, etc.  It is vital to get a broker that can maximize your investments and at the same time share your common values and personalities.  Below are 4 simple steps you can follow in selecting your broker:

Step 1: Set your goals

Like any other venture it is a must to establish first your targets.  Determine how much are you investing, how much return you are expecting to gain and when do you want to get it, or how much risk you are willing to take.  These are basic questions that need to be answered to give your account executive an idea on what he needs to accomplish with your investments.  When objectives are set, you can evaluate anytime if your investment or broker is doing good or otherwise. 

Step 2: Ask around

If you have friends or colleagues who have invested in the past or acquired the service of a broker and can recommend a good one then better for you.  You can also contact authorized government agencies such as the National Association of Securities Dealers (NASD) and other trusted organizations who can suggest good and trusted brokers.  This is also the best time to conduct background checkup of each brokerage firm and their list of representatives.

Step 3:  Make a shortlist

After all those researching and asking around it is now time to list some prospects.  You can schedule a meeting or interview to know more about them – education, experience, personalities, customer references, fees and commissions, etc.  You can do these through phone or in person.  This will initially establish your relationship with your soon-to-be broker.  Tell them about your financial goals or what you know about securities business and the things you want to learn.  Observe how they respond to your questions and if your plans coincide with his or her skills.

Step 4: Look for positive traits

You will be talking, discussing, and negotiating with your account executive majority of the time so it is highly recommended to choose one that you are comfortable working with.  The securities industry is quite complicated may give you some difficulty once in a while.  Do not hesitate to ask your account executive for any information regarding a transaction.  Also, do not be intimidated if you hear a technical term for the first time or not sure what it meant.  This is the best time to inquire and learn a lot from your broker.  He must be patient enough to guide you in every step of the way.  Do remember that every decision of your account executive has an effect to you and your investment.  It pays to know!