Fair Questions to Ask Your Broker

One of the questions I am constantly asked by people on the street is, “Why do I dislike brokers?” This has always surprised me because I do not dislike brokers. Actually, I have a great respect for those who are true brokers and make money for their clients.

I once asked a student who is a broker why they were taking my class. They answered, “In the last month I have been in countless meetings dealing with compliance, meaning how not to get sued. The sad thing is that during the same timeframe, I have not had one training session on how to make my clients more money — this is why I am taking your class.”

Two weeks ago, I wrote, “Being a broker must be one of the most difficult occupations in the U.S. In addition, there are good brokers and bad brokers, just like any occupation. Unfortunately, some are nothing more than street-corner salespeople selling products that are better for the brokers’ company than for their clients”.

Conversely, many brokers would love to have better-educated clients. To help with this process, I created a document titled, “Fair questions to ask your financial advisor or broker”. It is available free at my website under the offers tab. This document is designed so you can have it front and center for your next broker/financial adviser visit.

If you are wondering if you have a broker or a salesperson, here is an acid test (so to speak). Review the following questions. If your broker has already covered these topics with you, then you have your answer. If they have problems with these questions or you cannot get the facts, then you also have your answer. Let’s begin with these fair questions.

1. What is your overall market outlook for this year and next?

2. What is your opinion concerning specialty mutual funds vs. ETFs?

3. What is my current allocation of securities — in percent and dollars?

4. What is the total performance of my account and each position since we began, and year to date?

5. What fees did/does your firm receive from my investments, monthly commissions, 12b-1 fees, etc.? Does your firm receive end-of-the-year revenue sharing from my mutual funds or annuities?

6. What are my ongoing costs/fees for each security?

7. What is our downside protection if/when we have another sell off?

8. Why should I continue investing with you?

Please keep in mind many brokers are hardworking Americans, working in a difficult environment. These are fair questions that few investors ask but should. Remember, it is your money and not theirs. Sometimes this gets lost in the shuffle.

Professional brokers will have covered these areas when they suggested the securities you purchased while working with your asset allocation. They will have no problems answering these questions.

Finally, professional brokers like an educated client, so give them a fair opportunity to earn and keep your business.

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