If you’re a traditionalist, you may prefer to trade stocks the old fashioned way. You’ll visit or call a broker or brokerage firm, tell him what transaction you’d like to make, and let him do the rest for you.
Trading using a broker is easy, but you may not know how to find a broker. Here are a few tips on finding a stock broker near your location, and on making sure they’re legitimate.
How Do I Find a Stock Broker Near Me?
The first thing you’ll want to do is find a broker. Or, perhaps, a list of brokers which you can then vet to make sure that they’re both legit and good at what they do.
You can start with a simple Google search, which will give you a list of brokerages near your location. Typically, your search will result in locations with bigger names, like Edward Jones Investments, Scottrade or Charles Schwab. These firms are well known and have solid reputations, and you can call the firm directly to speak to a representative.
If you’re not interested in working with a bigger firm, you could consider searching for independent brokers. The number of independent stock brokers has decreased considerably with the advent of discount brokers, but they still exist. The LSE lists brokers directly on its website.
Finally, it’s always recommended that you ask for recommendations from friends. If you have friends who use a broker for their investments, ask them who they’ve used. If you don’t, check the internet for broker reviews. There are plenty of forums for traders online, and plenty of opinions as well.
How Do I Know if My Broker is Legal?
The last thing you want is to invest thirty grand in stocks, only to find out later that your “broker” was a crook. Make sure you check out your broker before you hand over any cash, and always trust your instinct.
You’ll want to find a broker with experience, so feel free to ask him questions. Don’t just ask about your portfolio, but ask about his history with other clients, as well. He should be able to answer your questions without hesitation, and while he can’t give you the details of his other investors, he can provide you with references.
Again, check with FINRA. This site will give you lots of good information, including your broker’s number of years in service, exams passed and state licenses held. The service is free to use, and will offer you peace of mind before you invest.
If you’re in the UK, you’ll want to check with the FCA. Like FINRA, the website will allow you to check out a broker to determine whether he is regulated, and information about his firm.
How Do I Choose a Broker?
There are so many options, but you can rest assured that you’ll find a broker who is right for your needs. There are a few things you’ll want to consider when you’re choosing a brokerage firm; once you know what you need, it will narrow down your options considerable.
First of all, how much money would you like to invest? Some brokerages have account minimums, and this number can range anywhere from $500 to $100,000. Check with your broker to see that the minimum investment required is within the scope of your investment capabilities.
Secondly, what would you like to trade? Some brokers will not execute trades beyond national borders, for example. Others will not deal in FOREX or OTC transactions. Decide, in general, what you’d like to trade and ask your prospective broker if he’s able to help you with those transactions.
Finally, it should go without saying that you want to choose a broker with whom you feel comfortable. You don’t have to be best friends with your broker, but it would certainly be helpful to be able to hold a civil conversation with him. And again, use your instinct. If there’s any little niggling doubt in the back of your head, consider it a red flag and continue your search.
Tips for Choosing a Broker
Once you’ve ensured that your broker is registered or regulated, go ahead and do a little research on the firm itself. Some brokerage firms are associated with banks, and will offer commission discounts to account holders. Merrill Edge, for example, is associated with Bank of America and offers occasional promotions.
Check out the other “features” your brokerage offers, too. Does he offer after hours or premarket trading? How about bonds or mutual funds? Think about what you’ll need as you build your portfolio, and weigh your options.
You could also consider using a discount broker. You don’t get the same personalized service with a discount broker as you do with a traditional broker, but the commissions are often much lower, and you’ll have just as many options. Discount brokers will even sometimes give you the ability to trade after hours or participate in premarket trading.
Now, as an aside to this, it’s possible for you to have the best of both worlds. There are discount brokers which allow you to also be assigned a broker who will be available to assist you should you need it. Trade.com, for example, offers a “dedicated account manager” who will help you if necessary. You can also find a great number of discount brokers with excellent customer service.
Choosing a broker doesn’t have to be overwhelming, and it’s a good way to establish a relationship with someone who will customize your portfolio to reach your goals. There are a few factors to consider, but when all is said and done, you’re still buying the same shares in the same companies.
Generally speaking, your broker makes money when you do. So choose a broker who is legally able to provide services in your area and with whom you feel comfortable. As you establish a relationship with the firm, your portfolio will grow, too.