You worked hard to save up a nest egg, and now you’re ready to put it to work. Don’t choose the wrong investment broker, help your money grow with these steps.
Investing in the stock market can be intimidating. Perhaps that why only 37 percent of young Americans currently have stocks.
If you’re interested in investing beyond your 401(k) but aren’t sure where to begin, it might be helpful to work with an investment broker. There are lots of benefits that come with hiring a broker, but you need to make sure you hire a reliable person.
Read on for some tips that will help you find the right investment broker to manage your funds and maximize your savings.
What is an Investment Broker?
An investment broker is an individual or an institution who handles investment transactions on behalf of their clients. Individual brokers typically work for major firms like Morgan Stanley.
An investment broker will work with you to buy and sell investments. They may also offer specific investment advice and retirement planning assistance.
Why Hire an Investment Broker?
There are lots of reasons to consider hiring an investment broker, including the following:
- Gain expert management of your investment portfolio
- Work with someone who will take your goals and cash needs into account
- Get help navigating complex financial situations
- Have questions answered as they come up
- Receive continuous comprehensive financial planning advice
You’ll also get peace of mind knowing that an experienced professional is monitoring the stock market and your investment portfolio and making changes as needed.
How to Find the Right Investment Broker
As you can see, there are lots of reasons to consider hiring an investment broker.
If you’re not sure how to go about hiring the right individual, these seven tips will help. Keep them in mind so you can find the best investment broker to handle your money.
1. Get Recommendations
When you’re looking to hire any kind of professional, it’s helpful to start by asking for recommendations. Talk to family members, friends, and colleagues to see whether or not they have a broker they like and would recommend to you.
If you can’t get any recommendations from people you know, trying doing some online research to get more info on brokers who could help you.
Once you’ve got a list of recommendations, make it more manageable by narrow it down to four or five potential candidates.
2. Do Your Research
Once you’ve got a list of potential candidates, it’s time to do some more in-depth research and figure out which ones might be the best to work with.
Start by looking at online reviews. See what people are saying about the brokers you’re considering, both positive and negative.
There are also lots of online tools you can use to compare candidates.
For example, the Financial Industry Regulatory Authority (also known as FINRA) offers a free online tool called BrokerCheck. This tool lets you look at things like a broker’s employment history, registrations, biography, and service offerings.
3. Consider the Type of Broker You Need
Learning about a candidate’s credentials is a great starting point. Don’t stop there, though, when performing your research.
You’ll also need to consider what type of broker a candidate is to find out whether or not they can meet your needs.
There are a few different types of brokers from which you can choose:
- Regular brokers: These are brokers who deal directly with clients
- Broker-Resellers: These are brokers who act as intermediaries between clients and larger brokers
- Full-service brokers: These are brokers who offer advice beyond just investing, such as retirement planning
- Discount brokers: These are brokers who only offer investment advice
There’s not one type of broker that’s right for everyone’s needs. But, it’s important to consider the different options so you can make the right decision for you and your money.
4. Consider Their Brokerage Fees
Of course, you’ll also need to consider your broker’s fees, as well. First, there are the trade execution fees — these are the fees that your broker charges to buy or sell stocks for you.
There are also some other fees you’ll need to consider, including:
- Minimums: Typically, you’ll need to meet a minimum balance (usually somewhere between $500 and $1,000) before starting a brokerage account.
- Withdrawal: There are usually fees required if you want to withdraw money from your brokerage account
- Complicated fee structures: Some brokers (usually broker-resellers) have unique, complicated fee structures with hidden fees
No matter what kind of broker you’re considering working with, it’s important to read the fine print and learn as much as you can about their fees.
5. Consider the Type of Investor You Are
You’ll also need to think about yourself and the type of investor you are. You’ll likely fall into one of two categories:
- Trader: Traders don’t hold onto stocks for very long; they make lots of trade executions over a short time span.
- Buy-and-hold investor: These investors hold onto stocks for a long time; they’re also known as passive investors.
Determining the type of investor you are will also help you determine the best type of broker for your needs.
6. Arrange a Face-to-Face Meeting
Once you’ve completed our research, you’ll most likely want to schedule a meeting to talk to your potential broker face-to-face. During this meeting, talk to them about their background, certifications, and investing track record.
You’ll also want to ask about the average length of their client relationships and the number of clients they’re currently working with. It’s good to know how often they meet with new clients and what their risk vs. reward investment strategy is.
7. Reflect on Your Interaction
After the meeting is over, take some time to reflect on how it went. Think about whether or not the advisor showed a genuine interest in answering your questions and whether or not the conversation was respectful. Consider whether they listened more than they talked, too.
Looking for Investing Advice?
An investment broker can take you a long way when it comes to maximizing savings and getting the most out of your investments. But, they can’t do everything for you.
If you want to learn more about how to handle your investments properly, check out the investing archives on our site today.
There are tons of great articles here that will teach you everything you need to know to get the most out of your investments.