How to Know Your Stock Broker is the Real Deal

A stockbroker’s job is to buy and sell shares on your behalf at major exchanges like NASDAQ or the New York Stock Exchange. Typically, they work for a brokerage firm and are responsible for many institutional and individual clients. Whether you’re new to the investment world and need to find a suitable stockbroker, or you suspect your current stock broker is not doing right by you, it’s essential to do your homework. We’ve included some useful information on how to ensure your stockbroker is legitimate. 

Get Personal Recommendations

The last thing any new investor wants to do is align themselves and their money with a stockbroker, only to later need a securities fraud lawyer due to a violation of their obligations. While there are plenty of trustworthy financial advisers who will make sound decisions for you, there are also many who wont. If your friends and family use brokers, ask them if they would recommend them to you. If you can’t get personal recommendations, ask your chosen broker for references to find out how they perform. 

Do Your Research

You can take many people at their word, but that’s not recommended when working with a stockbroker. Use professional and regulatory organizations to find out more about your broker of choice. There are many tools on the internet that allow you to search for specific brokerages and brokers to find out if they are verified. These tools also offer a look into their regulatory actions, employment history, investment-related licensing information, and any arbitrations or complaints they have received. 

Read Online Reviews

The internet offers a wealth of information on almost anything you want to search. Therefore, you can safely assume it can highlight some important details relating to your chosen stockbroker. Search their name, and see what you can find. You may discover reviews from current and past customers and their social media accounts to learn more about who they are. This simple step can offer much-needed confidence to start purchasing stocks

Visit Your State Office

You’re about to trust a stranger with a significant amount of your wealth, so consider visiting your state office. Here, you can find out whether your chosen adviser is registered with the state. You can then further confirm if their licenses and certifications are valid. 

How to Spot Stockbroker Misconduct

As a beginner or inexperienced investor, it’s only natural to put full trust in someone who knows more than you. This may do you no harm with a legitimate stockbroker, but could cause a great deal of heartache and see the need for a misconduct attorney with one that isn’t. Fortunately, there are a few ways to spot that your chosen financial adviser does not have your best interests at heart. 

  • They don’t consider your financial situation and personal circumstances when recommending investments
  • Every broker makes mistakes, but hiding or misrepresenting the facts surrounding an investment decision could spell fraud or negligence
  • They take part in excessive trading, also known as churning
  • They engage in unauthorized trading
  • They concentrate your portfolio too much

Investments have the potential to provide you with healthy long-term returns. However, a reputable, verified stockbroker is a necessary part of that. Before you decide on an individual or company, consider these points above. 


Leave a Reply

Your email address will not be published.