Money Watch: How to tell if your stockbroker's ... - Payday Loans UK

Q: How can I be sure that a stockbroker is acting in my best interest and not offering investments that give them the most commissions?

A: You can?t be sure without doing a little homework. If you are buying individual securities, stocks, closed-end funds or exchange traded funds (ETFs), your broker should be able to tell you upfront what the exact amount of the commission or charge will be.

Typically the charge is based on the number of shares purchased or the total dollar amount of the order. In any case, the commission on individual securities will have little to do with the recommendation.

The brokerage firm may be using its market-making status to build an inventory of stocks, which means that the broker can earn a larger percentage of the commission or trading fee on securities from those stocks. Clearly this could present a conflict of interest, so try asking if the firm makes a market on a stock that is recommended.

If you are buying mutual funds, wrap accounts, annuities or other packaged products, the full commission is disclosed in the prospectus. This is one reason why it is important to read the prospectus before making a purchase.

The broker should be willing to disclose to you the amount of compensation they will receive on any transaction. In addition, the broker may be offered other incentives like resort vacations or incentive payments to sell a certain amount of a particular product.

Money Watch, a new column that will run every Saturday, features a financial planner from the National Association of Personal Finance Advisers answering reader questions about saving, protecting and growing your money.

To avoid these problems check your broker or adviser?s credentials on the FINRA website (www.finra.org/). The website will list any complaints or awards.

Additional information may be obtained from the SEC?s website (www.SEC.gov). And BrightScope.com has a website with disciplinary histories for financial advisers.

If there are no red flags from these resources, look for a broker who has credentials that indicate a high level of training, such as CFP (certified financial planner), CFA (chartered financial analyst) or CIMA (certified investment management analyst). The credentialing bodies for these designations all have a code of ethics that requires putting the clients? interest first.

Susan John, NAPFA-Registered Financial Advisor

Financial Focus, Wolfeboro, N.H.

Source: http://paydayloans-uk.org/money-watch-how-to-tell-if-your-stockbrokers-on-your-side/

millionaire matchmaker shawshank redemption 3 10 to yuma west virginia football west virginia football black friday violence black friday violence