5 Things to Know When Speaking to Your Broker

5 Things to Know When Speaking to Your Broker

For the most part financial brokers are meant to give you information and advice that will help you put together a good portfolio. However, you should do some preparation on your own before you invest any of your money. ?It is vital that you not put yourself in a position of being over-reliant on guidance from your broker. You are, after all a client, and it is their purpose to sell to you.

Most brokers are on the up-and-up. They will do right by you and steer you in the right direction. Others are only out to make the sell, regardless of whether the stock is suitable for the kind of portfolio you?re trying to create. The only way to tell the difference between the two is to do some research of your own. This will allow you to sense when your broker is trying to push a product that may not be good for you.

The other thing that will help you keep a balanced view is to recognize the aims and limitations of your broker. There is an article over on Daily Finance that gives some great advice on this issue. It is written by a former broker and is filled with such cunning insight as this:

It’s easy to believe that brokers or advisers all have advanced degrees or special licenses. Unfortunately, that is not the case. In many cases, brokers only have to pass a test or two to sell securities or advise you. Often they have no previous experience in the industry and are in their role because they’re good at sales.

This doesn’t apply to all brokers. There are a number of certifications a good adviser can get, including certified financial planner, chartered financial analyst or chartered financial consultant, all of which require extensive work.

Further advice from this article can be found here. It easy to forget that one of the hallmarks of a good salesman is the ability to appear supremely competent. ?This kind of performance is as applicable to financial products as it is to a used car. What seems like competence is usually just the salesman’s confidence that he can get you to buy. It?s important to keep this in mind the next time you?re on the phone with a broker.

One other thing: you should always shop around. Don?t go with the first, or even the second, broker who offers you a good deal. Speak to as many different brokers as it takes until you find one with whom you?re comfortable. Of course, you should always be vigilant in monitoring the performance of your portfolio. But it is good to work with a broker who you can be sure is looking after your interests.