How to Evaluate Stock Brokers

When you need a skilled person to complete a task for you, it's often difficult to know where to turn. It's important to know how to evaluate a stock broker because your money is used to fuel your future dreams. You want to find a person who understands your financial goals, will protect your money as if it was his own, and who will charge a reasonable fee for his services.

• 1

  Write out your own financial goals. It's difficult to evaluate good help if you have no idea what you're hoping to accomplish. The Financial Industry Regulatory Authority recommends you think about what type of help you need so you can limit your search to those brokers who carry the credentials and offer the services you desire.

• 2

  Ask about experience. The Mississippi Secretary of State recommends looking for stock brokers with more than five years' experience. Ask about previous companies with whom they have worked. You don't want a broker who has bounced around from company to company. Ask about his experience before becoming a stock broker and how it relates to his current role. Choose a stock broker who has experience working with families similar to yours.

• 3

  Look for credentials. Some stock brokers call themselves financial planners or retirement planning specialists. Any stockbroker must have a Series 7 license to trade stocks. Other credentials, such as a Certified Financial Planner or Chartered Financial Consultant show that your broker has passed a series of exams certifying he is experienced in tax planning, retirement planning, and risk assessment to help him see your stock trades from a more well-rounded point of view.

• 4

  Review the broker's record at the FINRA website. The FINRA broker-check is a tool you may use at no cost which allows you to verify which firms with whom the individual has worked, securities exams taken and passed and a record of any complaints against the stock broker. If there were complaints, a detailed record will show the date of the complaint, summary of the client complaint, and the resolution.

• 5

  Review the stock broker's record at the state regulatory agency. If you're unsure of who to call, start with the North American Securities Administrators Association website's quick link to contact your regulator, where you simply click on your state and receive contact information. Call the number associated and ask for information about your stock broker. They will provide information on complaints about the broker and the broker's firm.