What to Know About Your Investment Broker

Anytime you decide to invest, you always do background research on the asset or security, right? It is important to know the why and how of an asset or security’s performance before deciding to invest.

Shouldn’t this be the same for your investment broker?

Whatever security in which you invest, it is important to know who your investment broker is. Knowing your investment is in the right hands goes a long way in ensuring the security of your investment. This means more than knowing your broker’s name and favorite sports team. As an investor, you have to know that the person handling your finances and assets is trustworthy enough to have that responsibility. Investments already assume enough risk. You should not have to worry about your investment broker.

Vetting Your Broker

There are some important things you need to consider before choosing a broker that is right for you. This requires doing some background research on potential candidates beforehand. Investors should know a broker’s:

• Disciplinary history
• Reasons for departure from other firms
• Professional conduct
• Personal financial health

Fortunately, there are tools available to investors that make this very easy. The Financial Industry Regulatory Authority (FINRA) has a great website, BrokerCheck, that searches their extensive database of registered individual brokers and firms. FINRA’s database looks into several key aspects of a broker’s background and experience to provide investors with a comprehensive view of broker competency and professional ethics.

Who, What, When, Where, Why… and How

Your broker should be able to answer these basic questions about their performance and employment history. If a potential investment broker seems unwilling or unable to answer these simple question, they are probably not a good fit. Don’t put an added risk on your investment. Put your financial future in the hands of a broker you can trust.