How do you trust a new broker?

1 Check their credentials

Before you hire a new broker, you should check their credentials and background. You can use online tools, such as BrokerCheck by FINRA or the SEC's Investment Adviser Public Disclosure website, to verify their license, registration, education, experience, and disciplinary history. You can also check if they have any certifications, such as CFP, CFA, or CPA, that indicate their expertise and professionalism. You should also ask for references from previous or current clients and contact them to get their feedback.

2 Compare their fees and services

Another factor to consider when choosing a new broker is their fee structure and service offerings. Different brokers may charge different types of fees, such as commissions, spreads, markups, account maintenance fees, or transaction fees. You should compare the fees and services of several brokers and ask for a clear and detailed explanation of how they are calculated and applied. You should also ask about the services they provide, such as research, analysis, recommendations, reports, or access to trading platforms. You should look for a broker that offers the services you need at a reasonable and transparent cost.

3 Assess their communication and performance

A good broker should communicate with you regularly and effectively. They should listen to your needs, goals, risk tolerance, and preferences and tailor their advice and strategies accordingly. They should also keep you updated on your portfolio performance, market conditions, and any changes or issues that may affect your investments. They should be responsive, honest, and respectful and answer any questions or concerns you may have. You should also monitor their performance and track their results. You should evaluate their performance based on your expectations, benchmarks, and objectives and review their performance reports and statements carefully.

4 Review their agreements and policies

Before you sign any agreements or contracts with a new broker, you should review them carefully and understand the terms and conditions. You should pay attention to the scope of their authority, their fiduciary duty, their dispute resolution process, and their privacy policy. You should also look for any clauses that may limit your rights, such as arbitration clauses, indemnification clauses, or waiver clauses. You should also ask for a copy of their code of ethics and conduct and check if they comply with the industry standards and regulations.

5 Trust your instincts

Finally, you should trust your instincts and intuition when choosing a new broker. If you feel uncomfortable, pressured, or suspicious about a broker, you should not work with them. You should also be wary of any red flags, such as promises of high returns, guarantees of no risk, lack of documentation, or requests for personal or financial information. You should also avoid brokers who are pushy, aggressive, or unprofessional. You should look for a broker who is trustworthy, reputable, and compatible with your style and goals.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?