Investing in the stock market is a very simple thing to some. You buy an investment like you buy a product at a shop. So why is it important to choose a stockbroker that is right for you?
A stockbroker is the equivalent of a personal shopping assistant. They know your preferences, your likes, your dislikes, your favored asset classes, your risk profile and they make judgments based on that information. A stockbroker has to work with your goals in mind. Knowing this, this is how you should find a good stockbroker.
You are the client
Stockbrokers are service providers. They are in business to make you wealthy. Some stockbrokers feel that their business is to buy stocks and helping you make money is just incidental. Whatever a stockbroker says to you, always remember you are the client. It is your money and you make the final decisions. If you feel uncomfortable about any investment proposition, tell your broker and they will respect your decision. If they go ahead and go against you, then you definitely have the wrong stockbroker.
Make sure they have deal access
One of the main reasons to go with a stockbroker is that they trade in heavy volumes and this entitles them to allocations of special issues, convertible notes and IPOs that you ordinarily would not have access to. This is important as they are opportunities that offer real value. Through a stockbroker you can get massively undervalued IPO stock or get high earning notes that you would not be able get through an online trading platform.
They know the why’s not just the what’s
When you are at a barbeque and your friend tells you of a hot stock tip, the important information is not the what, it is the why. Ask yourself “why is this tip worthy of my hard earned money?” A good stockbroker will make decisions based on your profile and then choose a stock. They should be able to explain to you in simple terms why they think that stock is a good choice for you. If they cannot explain their actions, then drop them. As an example, just to say a stock is undervalued is insufficient, they also have to tell you what the outlook is and how they have come to that conclusion.
You can make investments yourself. It is much cheaper to invest in stock yourself. But a full service stockbroker can make a difference as you have access to knowledge, experience and investment opportunities you would not usually have access to.