Many people wanting to invest in the stock market will hire the help of a stockbroker, but can these professionals ever be trusted?
Stockbrokers will claim that they have your best interests at heart, but as we all know many stockbrokers accept commission from partners and will generally try and get some profit for themselves. The likes of The Wolf Of Wall Street hasn’t done much good for stockbrokers’ reputations by showing just how bad the corruption and dodgy dealings can get. However, that isn’t to say that every stockbroker is a dodgy character in it for themselves – there are some stockbrokers out there that will help you make the best return on investment possible. Here are just a few tips to help you choose an honest stockbroker.
Don’t always trust reviews and testimonials
Reviews and testimonials can usually give a good indication of a company’s reputation and this applies to stockbroker firms. However, you should take some of what you read with a pinch of salt. Being such a highly competitive industry, many dishonest stockbrokers will fight to the top by using dishonest tactics such as giving fake negative reviews of other companies and faking their own positive reviews and testimonials. Keep your wits about you – you can often tell when a review is fake if it is very short and vague.
Check that they’re registered
A good broker will be registered with state regulators. Sites like BrokerCheck can help you to check if a broker is licensed, as well as offering history on how long they’ve been operating. This could prevent you trusting a fake broker who is just going to run away with your money.
Ask for proof of figures and stats
Figures and stats are hard to falsify and a broker that is prepared to show you these is generally honest. This could involve success stats from previous clients or comparisons of stocks out there that ensure you’re getting the best investment for your money.
Use a money concierge
Sources of financial advice such as The Ascent can offer a transparent comparison of stockbrokers that could help you to make the right choice. By being able to compare brokers against one another you’ll have a better idea of which ones you trust. You could even hire a financial advisor to accompany you when talking to stockbrokers to help explain some of the stock jargon in layman’s terms.
Consider other options to brokers
You don’t have to rely on brokers when getting help with the stock market. Nowadays there are a multitude of stock comparison websites that are can help to point you in the right direction. You can also use robo-advisors that help you to make the best investment based purely on hard stats – you often have to pay for robo-advisor software, but it could give you more control and transparency than using a broker.