Selecting A Full Service Broker/Advisor

If you decide to use a full service broker, not only do you have to decide which firm, but you also need to select an individual broker.  Certainly if a friend has used one and is happy with their services, add them to your list.  When you talk to your friends:

See if their investing goals and styles are similar to yours. 

  •  Are they frequent or infrequent trades? 
  •  Do they speak to their broker frequently or only once in awhile. 
  •  Are their telephone calls returned in a timely manner? 
  • Are the statements easy to understand? 
  • Have they found the research reports and recommendations accurate? 

Obviously no one can predict the market 100% of the time.  Meet with some brokers, also find out:

  • A brokers education, background and experience.
  • What is their approach to investments? 
  • Do they ask you questions about your goals or financial situations?
  • Are they good listeners, or are they only salespersons? 

If they promise to make you rich, run.  Do you get along well with the broker; are they easy to talk to?  Make sure they will follow your advice, and be comfortable with the person if you have to disagree with their recommendations.  After you select a broker, give it time to develop.  If you are unhappy, find another broker or brokerage.  Generally there is no account minimum, but an annual fee minimum of $1,500.  Each brokerage has many asset based fee type of accounts, with a variety of services.  You need to investigate them, and then you need to make sure you only pay for the ones you need.  Finally make sure the fees you pay warrant the amount of service being provided.

THING TO LOOK OUT FOR (These also apply to Financial Advisors): 


Most broker/agents are hard working individuals who try to help their clients.  But unfortunately there are always a few who try to take advantage of people.  This is why you have to monitor your broker's activities (Keeping Records).  Here are a few that indicate trouble. 

  • Unauthorized Trading:  Trades would not be made without your permission.   If a broker asks you to sign a discretionary authority over your account (meaning they can do whatever they want), DON'T SIGN, LEAVE.  If you see a trade you did not authorize, you must bring it to their attention immediately.  Keep a log of when you authorized trades, and certainly when you see a unauthorized trade, if it occurred, when you notified your brokers, what they did, when it hopefully was corrected, when your account was properly adjusted.
  • Churning:  This is a term used to describe the activities of brokers who trade excessively in order to run up their commission.  But it is not beneficial to the clients.  Churning is illegal under the SEC rules, but it is difficult to prove.  Again keep good records and notes on conversations.
  • Failure To Execute:  Brokers are supposed to execute your orders and in a timely manner.  If the brokers fails to obey your order or caused a lengthy delay you should complain. 
  • Misrepresentation of Risk:  If they are making a recommendation, they should provide you accurate information about potential risks.  Almost all investments carry some risks, and some a lot more than others.  If they don't provide a risk assessment, demand one, preferably in writing.
  • Inappropriate Investment Recommendations:  One reason you are paying the big bucks for a Financial advisor or a Full Service Broker/Advisor is that they are supposed to know your investment goals and help you try to reach them.  If, I know it is a long way off, if you are about to retire, and your broker suggests you put most of your money in a speculative stock, RUN.

Things To Do If Something Goes Wrong

Get your records together.  Review any documents you signed when you opened your account (The Fine Print).  This might limit your options.  Document, Document, Document!  Take notes and dates of all conversations.

Speak to Your Broker...if that doesn't work

Talk to your brokers Boss...if that doesn't work

Contact the Compliance Director, at the firm's headquarters.   In most cases you are limited to an industry arbitration process.  Many cases try to use mediation first before arbitration.

Based on the agreement with the brokerage firm, you may be able to go to Small Claims Court; also this will be determined by the amount of the claim.

For most complaints you can contact the Financial Industry Regulatory Organization.  Hopefully it will never get this far!  Further information contact:
Financial Industry Regulatory Organization: