Stock Broker, Your Friend or Businessman?

Whether the stock broker is your friend or he is a businessman? He has to be both. In addition, he has to be a good human being. For a new entrant in the share business, dealing through the broker is highly desirable. Even at a later stage, when the investor gains experience and is familiar with the procedural aspect of the trade, one should not be in a hurry to dispense with the service of this trusted friend specializing in economics and commerce. Consult some friends, or your banker and the outcome of the discussion with them is likely to lead to you a good broker.

Two heads are better than one. A good stockbroker is like the oar in the hands of a boatman. About the necessity to engage a broker or not, your may argue and counter-argue with your mind. This is the internet age...My knowledge about computer is perfect...Why pay the service charges to a third party? ...Why increase the overhead expenses? Your conclusion, not to engage a broker may be right...the idea to engage him is also not wrong! When you are in the thick of investment activities, when the market is volatile, when you are not sure when the Bull Phase will commence, after your loss-incurring experiences in the Bear Phase of the Market, you feel you need the services of someone who can cheer you up....Someone who has weathered such storms in the past.....and your broker, is the one who can save you from big losses.

An experienced broker has in his mind the lessons learnt in the past about dealing with different types of clients whose level of investment varies much - big, moderate and small. Once you develop the association, it is desirable to stick to him, unless there are strong reasons to change. In the first meeting, he may need the detailed information, the important one being your investment goal and the size of your investment. On the basis of the information provided by you, he will assist you in creating a portfolio. He will advise you about the market trends on a continual basis, and mentions about the special picks at the right time.

When you meet the broker for the first time, do not be carried away by the academic credentials on his business card. Share investment is mostly about practical experience, but such recognized diplomas/degrees like CFA (The Chartered Financial Analyst), CLU (The Chartered Life Underwriter) mean something.

A final question: On the basis of your first interaction, what do you think? Is the broker really interested in having you as his client? If the answer is in the affirmative, go ahead with your financial dealings with him and open your cards.