When you choose to work with a broker,
you're placing your trust — and your money — with that person and his or her firm. So doing your research in the very beginning can help you avoid potential problems later on.
Check the records
It’s important to find out whether the broker you’re considering is properly licensed, which is required by state and federal regulators. There are strict qualifications for licensing, including a professional background check and a passing grade on a securities exam administered by the Financial Industry Regulatory Authority (FINRA).
And licensed brokers are required to disclose important information about their business — such as disciplinary actions taken against them.
In addition, if you do business with an unlicensed broker, regulators may be less able to help you if things go wrong.
Lifetime learning
FINRA rules require that all brokers take continuing
education (CE) courses. Those rules also require
every firm — whether large or small — to
establish a training program for its brokers.
Keep in mind that running
a background check on a broker is only one of several steps in choosing
the right professional to work with. You’ll also want to ask
for references and interview the candidate. And most experts agree
that the best way to begin your search is by asking for recommendations
from your other professional advisers, and friends and family who
are investors themselves.
