There are two types of stockbrokers available depending on your needs – discount brokers and full-service brokers – and Gordon Brent Pierce will tell you that having either on your side helps tremendously with managing investments. Regardless of which type you use, be sure you do a little checking up on your broker to make sure it is the one for you. Through your state security regulator, you can find out much about a broker before handing over your money. Gordon Brent Pierce agrees that it is important to find out a bit about the person you will be trusting with your investments.
Licensing and Regulation
An investment broker must be registered or licensed, and the agency with which they are registered or licensed with will depend on the volume and type of business they handle. Through a background check, Gordon Brent Pierce or any investor could find out the licensing status of any broker, advisor, or other financial professional.
Working with an investment broker that is licensed or registered is extremely important because you are likely to lose all your money if he should later go out of business. Why risk your money? Do as Gordon Brent Pierce suggests -- have a simple check on the status of the securities broker you would like to work with completed first.
Education and Practice
You can also find out what school your broker attended, although you may or may not personally find this information useful. It is required that brokers make it public, but as Gordon Brent Pierce notes, it is up to you to do the research. Brokers, especially discount brokers, don’t necessarily provide this information to new clients.
Through the state securities agency or other indexes, you can see if your broker or one you would like to work with has had trouble in the past with regulating agencies. The Central Registration Depository will have this information on hand for most brokers and the brokerage firms for which they work. It’s worth looking into.
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