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Investment Advisors (Stock Brokers/Financial Advisors)

What To Look For Before Engaging A Stock Brokerage Firm

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First find a brokerage firm that fits your needs and other criteria. If you choose a full brokerage firm, then identify a broker that works for your needs.

When vetting a brokerage firm:

  • Check into the condition of the company for which the broker works.
    • Is the company financially secure?
    • Does it have a history of financial security?
    • What is the company's legal history?
    • Keep in mind that The Securities Protection Investors Corporation insures brokerage accounts up to $500,000 plus up to $100,000 for cash claims. You can also ask how much additional insurance the firm carries.
  • Find out the amount of the commission (transaction costs) or other fees including service fees. (The more you pay in fees, the lower your return).
  • Ask about the firm's research and mutual fund offerings.
  • Does the firm provide access to independent investment research?
  • Does the firm provide free web planning tools? If so, do you find the tools user friendly?
  • Smart Money Magazine publishes a broker survey every year that is worth checking out: offsite link

You can check on individual brokers through the following resources:

You can check the legal history of a brokerage firm through the following sources:

  • National Association of Securities Dealers (self regulation). offsite link, click on the BrokerCheck Program or call: 800.289.9999 (you can also check our individual brokers here for possible violations of securities laws.
  • Your state securities regulator for possible violations of state securities laws. To locate your state agency see: offsite link

If you decide to use a full brokerage firm, look for a broker that:

  • Has a track record of making money for clients - particularly clients who need to be more conservative in their investments.
  • Will build an investment model based on your individual time horizons, goals, risk tolerance and tax situation.
  • You feel comfortable talking about your financial and medical situation as well as your goals.
  • Caution: Do not use any broker who makes promises about a rate of return he or she will earn you.

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