How to Choose the Ideal Broker for Your Needs

As many Americans nervously check the stock reports daily, many of them cringe as they watch their hard-earned investments slip away.

Others, meanwhile, sit on the sidelines and wonder whether or not they should get into the investing arena in the first place.

Before choosing an investment broker, here are three things to consider regarding rolling your sleeves up and opening up an account:

* Consider the full service broker and the discount broker – The full service or traditional broker is that man or woman who works directly with you, providing ideas, updating your portfolio, and being there to answer questions about how to improve your investments. The discount broker is the individual who typically doesn’t provide investment advice. They are generally schooled to follow through on your investment wishes. You will also typically deal with more than one individual in a discount-broker situation.

* Know the opening balance – Before the account gets off and running, you will need to provide a minimum opening balance, which typically varies from broker to broker. In many cases, $1,000 is the opening amount. If the opening balance is lower, make note that there may be a maintenance fee, so get everything in detail before you sign any paperwork.

* Cover yourself – Finally, make sure you have funds available for emergencies before you open the account. Many advisors will tell you to have some six months’ funds in savings. You want to be able to account for if you lose your job or have another major financial emergency such as divorce or illness. A good idea here is to think about maintaining up to a year’s worth of salary in money or cash equivalents in the event you may need it.

The Search for a Broker Begins

Whether you are a veteran or a newbie to the investment scene, having the right investment broker to help guide you along the way is key in today’s financial world. While some investors are savvy enough to call their own shots, many others will find that the help of a broker goes a long way in determining success or failure.

For those investors seeking the right broker to assist them, there are several factors to look at in order to make the right call.

First, you want an investment broker that puts ethics and positive actions to work.

Remember, they work for you and not the other way around. If your broker of choice seems to be taking some shortcuts, doesn’t seem all that concerned about your money, or makes you go to them all the time, it could very well be that you chose the wrong broker.

Do Your Research When Broker Shopping

It’s important for you to research a number of brokers so that you have a strong field from which to choose.

The biggest mistake you can make is choosing the first broker that comes along, either through an Internet search or flipping through the Yellow Pages. In today’s hectic world, too many consumers will oftentimes just go with whatever choice is available and proves convenient. The problem with applying that technique to your investments is that those investments may not be available down the road if you do not properly plan for tomorrow.

Where your money and your future are concerned, take the time to pick the right broker and get references from family and/or friends in the process regarding who they work with. You can and should use any online broker reviews you come across, allowing you to get a feel of respective brokers from individual investors.

Look for an Organized Broker

Another important factor in the selection process is finding a broker that puts organization high on their list of attributes.

Given the fact that most brokers deal with a countless number of clients, you don’t want someone who doesn’t remember your name or your investment situation. If you start working with someone and you feel like they are only giving you attention here and there, find someone else. The bottom line is that your money and future finances need to be of utmost importance to both you and your broker.

Money, Money, Money

While deciding on where to turn for an investment broker, another item to ponder is what fees you will be looking at for their company’s services to manage your investment portfolio/s. Most new investors are likely to not want to spend a large amount of money to get started, so shop carefully and ask any potential broker to spell out in clear terms any charges for their services.

People always say that you should read the fine print–that is exactly what you should do when it comes to hiring a broker to manage your assets. One nasty surprise you can find over time is that you are being charged this and that fee for their work, meaning you could be throwing money away, especially in cases where your broker is not putting your interests first.

Brokers Should Educate Their Clients

Speaking of brokers spelling things out in concise terms for you, make sure you deal with a broker who educates you and does not try to keep you in the dark.

Even though the broker is the knowledgeable one and will do the bulk of the work on your investments, they should not be keeping you in the dark in regards to your funds. Do not be afraid to ask questions, and communicate with your broker whenever needed so you know how your funds are being managed. Given how shaky the economic situation remains to this day, it is important for you to be involved in your investments and not riding the bench.

Communication is Key

Lastly, require that your broker talk with you from time to time during the year regarding how your investments are doing. Yes, in most cases they handle countless numbers of clients, but that does not mean your portfolio should be any less important to them.

If you do not hear from your broker from time to time during the year, initiate the call and ask them to take a few minutes to review your investments with you, what seems to be working, along with what seems to need some attention.

Remember, this is your money, so don’t be afraid to let your voice be heard.


With 23 years of experience as a writer, Dave Thomas covers a wide array of topics ranging from purchasing used office furniture to managing your employees’ 401Ks.

One thought on “How to Choose the Ideal Broker for Your Needs

  1. Prior to you making a choice on which real estate property dealer to use, find out how they work out.
    Request what sort of coaching and experience they have.
    You also want to look into the methods they prefer and make
    sure they are moral when conducting enterprise. Question to find out the broker’s stock portfolio. He should certainly provide you examples of effective talks. Also check with the brokerage to provide you with a good example of an unsuccessful negotiation and describe what he learned from that encounter.

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