When selecting a financial advisor, investors need to know what they want before choosing a full-service broker.
There are many choices available to an investor selecting a financial advisor, but for the breadth of information they can provide, full-service brokers are hard to match.
A full-service broker offers exactly what the name implies: a full array of investment products combined with an expertise to know what investment opportunities are best for a potential client. Their services can include financial and estate planning, wealth transfer, insurance, banking and lending, as well as stock market transactions.
In most cases, an investor who is selecting a financial advisor will be in a position to consider between a full-service broker and a discount broker. Although discount brokers are branching more into banking and mortgage options, the difference is that full-service brokers are in a position to give advice rather than just perform transactions.
Knowing that difference, an investor can decide if he or she needs advice, and if so, can begin the process of finding the correct full-service broker for his or her needs.
With almost all investment decisions, asking friends or family for recommendations is a good idea. However, in doing so, an investor must determine if the person making the recommendation is using the broker for the same reasons as the new investor would use him.
Questions to ask would include:
How often do you make trades?
How often do you speak to your broker?
How often do the recommendations work out?
Once an investor has recommendations, he should interview the full-service broker in person to determine:
The broker’s background and experience.
The broker’s investment strategies.
How well the broker listens to the investor’s needs and desires.
The broker’s attitude toward communication with a client.
Finally, fees are a consideration, and a danger when it comes to selecting a financial advisor. Full-service brokers and discount brokers both charge fees for making transactions, and get commissions on almost all trades. Therefore, they are going to be enthusiastic about getting an investor to do a lot of business.
Full-service brokers might be an investor’s best option if the investor is not planning on being an active trader. The broker will recognize that and will realize he will make the most money off the new relationship by suggesting stocks with the greatest growth potential. But the investor must make sure the broker is still willing to be communicative knowing the investor is not going to be an active trader.
Selecting a financial advisor requires research, but it also helps for the advisor to know what he wants from a financial advisor before making a selection.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.