How to Know If Someone Is a Stockbroker

Before investing, ensure that your broker is certified and qualified to give you sound financial advice.

A stockbroker is a licensed professional who assists you in buying and selling stock. In order to qualify to give financial advice and execute financial transactions on behalf of clients, brokers much pass two licensing exams called the Series 7 and Series 63 exams. Some states also require the Series 65 exam. According to the U.S. Securities and Exchange Commission (SEC), you should ensure that your stockbroker is registered and has not had legal run-ins with regulators or other investors. There are a few simple ways to verify this.

Instructions

1. Look up the firm or individual broker using BrokerCheck, a free service provided by the Financial Industry Regulatory Authority (FINRA). BrokerCheck searches the Central Registration Depository (CRD), which is the online registration and licensing database for the entire securities industry.

2. Read the report provided by BrokerCheck thoroughly. It will provide you with the results of a background check, including the broker's current legal or employment status and any charges, convictions or disciplinary actions a firm or broker has undergone.

3. Find out who the securities regulators are in your state. The website for the North American Securities Administrators Association (NASAA) lists the current member representatives from each state.

4. Contact your state's regulator and ask him if your broker is registered and how long they have been in business. You should also ask if the broker has any record of complaints or disciplinary actions.

5. Interview your chosen broker after you have ensured that he is licensed and qualified. It is important for your broker to understand your investment goals and your financial situation. It is also important for you to feel comfortable with your broker and to know that he has your best interest at heart.

Tips & Warnings

• In addition to getting advice from your broker, it is important to research potential investments yourself. Ultimately, you are responsible for decisions regarding your money.

References

• US Securities and Exchange Commission: Checking Out a Brokerage Firm, Individual Broker, Investment Advisor Firm, or Individual Investment Adviser
• Financial Industry Regulatory Authority: FINRA BrockerCheck
• North American Securities Administrators Association:NASAA Member Representative List
• Answer Desk on MSNBC.com: How Do I Find a Good Stock Broker?

Resources

• Money Week: How to Choose a Stockbroker