[copperpress-advertserve-ad-reload zone="3"]
ARCHIVED  August 27, 1999

How to pick a stockbroker

The stock market isn’t exactly rocket science, but it helps to have someone on your side who knows the ropes, if you’re going to invest, especially if the chore of managing your money on a daily basis doesn’t appeal to you.
If you think a stockbroker is for you, make sure you have a nest egg set aside to buy stocks and other investments for a portfolio. Unless you have a job with a good income, chances are you don’t have the cash necessary to buy several stocks. A good remedy for this is to join a mutual fund, where you can invest $100 monthly and build up about $10,000 or more as a nest egg.
Make sure you have your goals clearly set before entering the stock market. Why are you investing? Chances are it’s for one of two reasons: retirement or to build a fund for your kids’ education. Your age will have a lot to do with it as well. If you’re young and inexperienced, you can suffer a loss, make mistakes and call it one of life’s lessons. If you’re older, the clock is ticking louder. You don’t have the time for big mistakes.
Why is all this important? Because it establishes the rules for your investment strategy, and making this clear to someone you’re considering as your future broker will mean fewer problems later. He’ll know what to expect from you, and you will have set the rules from which you don’t want to depart without a very good reason. Before you pick a broker, investigate. Word-of-mouth advertising is always a good approach. If you have a friend whom you regard as financially savvy, ask him who he recommends and uses and why. You can also check a broker’s record with the National Association of Securities Dealers or the Society of Financial Planners in Denver. Everyone makes mistakes, so you shouldn’t be too concerned if a broker has a complaint on his record. However, more than five or so in a few years is cause for concern.
Back to clear communication between you and your broker. Your goals and strategy will determine what kind of compensation arrangement you’ll have. A broker can be paid on a flat fee or on a commission basis. A flat fee means the broker is paid once over a certain period of time. If the broker is on commission, he gets paid every time he makes a trade.
This can be a delicate thing. A flat fee sounds nice, but if it’s not enough, the broker might think he’s not appreciated. The old, blunt saying in retail: “Minimum wage, minimum service,” applies here.
On the other hand, a stockbroker operating on a commission basis might talk you into trades that don’t earn you any money but get him a commission. A good way to check a firm’s stock-picking record is to check The Wall Street Journal, which rates stockbrokers on this skill every quarter.

The stock market isn’t exactly rocket science, but it helps to have someone on your side who knows the ropes, if you’re going to invest, especially if the chore of managing your money on a daily basis doesn’t appeal to you.
If you think a stockbroker is for you, make sure you have a nest egg set aside to buy stocks and other investments for a portfolio. Unless you have a job with a good income, chances are you don’t have the cash necessary to buy several stocks. A good remedy for this is to join a mutual fund, where…

[copperpress-advertserve-ad-reload zone="3"]

Related Content

[copperpress-advertserve-ad-interstitial zone="30"]