Finding a Broker, Opening an Account, and What It Costs to Buy Stocks

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Finding a Broker, Opening an Account, and What It Costs to Buy Stocks

Branch offices of most New York Stock Exchange firms have a broker of the day. He or she will probably be called a registered representative (RR), an account executive (AE), or an investment consultant (1C). This is the person you will likely talk to if you visit a broker's office looking for information or to open an account.

How do you find a competent stockbroker? I suggest you follow a slightly different procedure. Go to the office of the firm you choose and ask to see the office manager
or vice president in charge of the office. Introduce yourself to the manager. Say you are considering opening a new account but would like to deal with a broker that has definitely been successful at making money in his or her own personal account and for most customers' accounts.

This person should have already been a broker for two or three years or more and possibly be 27 or older. But don't be too impressed with age. The registered representative you're looking for could be young, middle-aged, or older. Age or years of experience is certainly no sign that a broker is a very successful student of the stock market. Did you ever hear the story about the schoolteacher who had 25 years' experience but was turned down for a job by a new principal? The principal felt the teacher didn't have 25 years' experience, but just
one year's experience 25 times over.

Ask Questions....It's Your Money

When you meet the broker recommended to you, ask how he or she gets stock ideas and research information. Don't be afraid to ask a lot of questions. It's your money.

You could ask about the broker's investment philosophies, beliefs, and methods. What are two or three of the best stock market books he or she has read? If the broker can't easily name a few, then maybe you should be a little cautious.

If the broker relies solely on his or her own firm's research department for ideas, information, and reports, you may be better off visiting with a few other brokerage firms before you decide where to open your account.

The better brokers will show more initiative, perhaps by subscribing to a chart service or Investor's Business Daily on their own, and will probably have several other sources of information, ideas, and research.

Following brokerage firm research department reports is not necessarily an outstanding way to find money-making investment ideas. When I was a broker with a major New York Stock Exchange firm years ago, I never followed any of the firm's research because it wasn't too astute. Brokers that have attended Investor's Business Daily all-day workshops certainly should be far more knowledgeable than those who haven't.