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Stock Broker or Investment Advisor Selection

When considering the investment in a mutual fund, you should carefully analyze the potential alternatives you have among the investment advisors, brokers and brokerage firms. Many brokers address their potential clients by calling them on the phone and describing the services they offer. This method is referred to as a cold call. Avoid making a connection with such brokers since all you have is their word. You should make the appropriate research before you entrust your money to someone you don't know.

Mutual Fund Broker Interview

Consider the mutual fund investment with a broker as a job that should be done and you as the employer. Therefore, in order to make the most appropriate choice you should do an interview with each candidate. Listen carefully to the answers they give you to your questions in order to determine whether the goals of the broker or brokerage firm coincide with your objectives. Additionally, you may refer to the opinions and recommendations to your business associates and relatives.

Mutual Fund Broker Professional Experience

Some of the factors that should govern your decision when choosing a broker or a brokerage firm are:

  • Years in the securities industry
  • Firms for which s/he has worked for and for how long
  • Reputation of the firms for which the broker has worked
  • Employment history - stable vs. frequent job changes
  • Reasons for previous job reassignment
  • Current status of the firm for which the broker works

Past Client Relationships

When choosing your mutual fund advisor, broker or brokerage firm do not be reluctant to ask for information about previous clients' opinions. Additionally, ask the potential broker about details on any complaints, arbitrations or regulatory investigations. Customer complaints are not always a sign of a badly done job of the mutual fund broker. It is absolutely normal for a broker or brokerage firm that has been long enough in the mutual fund industry to receive a complaint, since every customer has specific individuality and needs. As it is outside the financial world, it is hard to completely please a person. Furthermore, the fact that a broker admits regulatory investigations or any other type of incurred problems may signify that s/he stakes on open and honest relationships with their clients.

Verification of the Acquired Information

After you have received all of the information you consider suitable to have, you should check the mutual fund broker's background through a trustworthy source. Such a source is the securities regulation division of the state in which you reside. All the information we have advised you to obtain in the previous lines can be easily verified through the publicly available records of the securities division. In this way you can check whether the broker or brokerage firm has been faithful enough in his responses. If there are any differences, see which information s/he has faked and try to figure out the reasons.

Every broker has a Central Registration Depository (CRD) record, which is publicly available and can be obtained from the NASD or the state securities division. The CRD record includes all the important information surrounding the past and current activities and status of the broker. If there is a pronounced trend of customer problems, you'd better not hire the broker or brokerage firm.

Final piece of advice. When selecting the potential mutual fund broker/brokerage firm, don't underestimate the importance of the face-to-face interaction. You can learn a lot about a person from the way his/her office is ordered and his/her body language.

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