How to Select a Stock Market Broker

Your interest in the stock market needs to start with the selection of a good stock market broker. While you may see a stock or mutual fund that you want to invest in, you need a seasoned stock market expert to guide you in the right direction. There are several criteria you should use before you select your next stock market broker.

Difficulty: Moderate

Instructions

Things You'll Need:

• Promotional materials for potential stockbrokers

1. Assess the amount of experience a stockbroker has in your particular market of interest. Experienced brokers will elaborate on the success of former clients upon request. This criterion is particularly important if you are investing in a high-risk area or foreign markets.

2. Check commission and fee levels for a stockbroker to determine the value of her services. Steer clear of brokers who use a multitiered fee process or commissions that will harm your profit margin.

3. Request information from each stockbroker as you select the right firm for your needs. Brokers in the United States must take exams for Series 7 and Series 63 licenses to legally trade stocks.

4. Review the customer-service options and capabilities of an online brokerage before you select its services. Online brokers allow you to buy, sell and trade stocks in real time without consulting with a specific stockbroker. Use these websites only if they offer the best customer service for your particular needs.

5. Scan through the prospectus and promotional materials of an individual stockbroker to determine limitations on daily trading. Stockbrokers may place a minimum limit on the number of trades or the monetary value of your investments before providing special prices and incentives.

6. Schedule a one-on-one meeting with your stockbroker or brokerage representative before you make a final selection. Know your broker personally and allow him a window into your specific investment mentality before you hand over your investment money.

7. Gauge the level of personal service that a stockbroker provides as a final step in the selection process. Every investor should be assigned a specific broker or representative to contact at any time.

Tips & Warnings

• Decide early if you want to use a discount broker over a full-service broker. Discount brokers provide a minimal level of service to investors, but they allow you to make trading decisions online. Full-service brokers provide in-depth analysis and advice with each trade but require higher commissions and fees.