How to Avoid Getting Ripped Off By Your Stock Broker

When you invest money with a stock broker you want to make certain you are dealing with a reputable person. There are steps you can take to avoid getting ripped off by a stock broker and this article will guide you in how to do it.

Difficulty: Moderate

Instructions

1. The first step to avoid getting ripped off by your stock broker is to perform an internet search for the name of the broker and the name of the company they work for. If there has been negative information posted about the broker or their company this is a quick way to find it.

2. The second step is to verify that the company the stock broker works for is listed and in good standing with the Better Business Bureau. If the company is not listed with the Better Business Bureau, or the company has complaints listed, then do not invest your money with that broker.

3. 
    

   The third step to avoid getting ripped off by your stock broker is set up their commission as a percentage of your portfolio, not on a per trade basis. If your stock broker is managing your portfolio on a per trade basis then they can "churn your stocks". Churning is where a stock broker makes trades solely to earn a commission, and you do not want a broker doing this with your money. Set up their commission as a percentage of your portfolio, this way the broker has an incentive to make your stock portfolio perform well, and also gives them no reason to churn the stocks.