Interview Questions for Brokers

With brokers, you have an initial interview and then subsequent mini-interviews whenever you discuss making additional investments or changing your portfolio. The first interview should define the relationship and establish your comfort level with the broker; the other is part of ongoing maintenance and is designed to keep you informed, the broker honest, and the relationship moving forward.

Your First Meeting with a Broker

During your first meeting with a broker, start with these questions: What is your educational and professional background? A broker's background will provide you with clues to his competence.
If he has been jumping around from one firm to the next, there could be trouble ahead. Many firms don't fire brokers, but simply encourage them to leave before they get the axe; when that happens, a poor performer packs up and moves to the next firm. (Good brokers sometimes jump ship, too, especially if they have been lured by bonuses and improved commission schedules.)

Smart Investor Tip

If a knowledgeable and experienced broker has moved several times in recent years, be prepared to call the broker's previous employers for a reference.
If you find someone who appears knowledgeable and experienced but who has moved several times in recent years, be prepared to call the broker's previous employers for a reference. Ask the manager of the old office whether she would hire the broker again and whether there were any discipline problems; some office managers will feel constrained by confidentiality rules not to tell you, but most will warn you away if there were real problems. (After all, if someone warns you away from the advisor, he or she may also be able to capture your business.) What continuing education classes have you taken? What certifications, if any, do you have? Classes aren't a necessity, but they do show commitment to staying on top of available products and laws. This is particularly important if you plan to have a broker advise you on more than just plain-vanilla, pick-a-stock/fund/bond issues. What is your CRD number? This is one of the few deal-breaker questions in all of financial services, so don't waste your time and save it for the end of an interview. CRD stands for Central Registration Depository, and it is the centralized clearinghouse used by regulators for filing complaints against brokers. When a broker passes the exams and gets a license to sell securities, he or she gets a CRD number. When there are complaints filed against a brokerâ
By Chuck Jaffe
Chuck Jaffe is a senior columnist and host of two weekly podcasts at MarkWatch. He has also been a guest speaker on several television and radio shows.

Copyrighted 2020. Content published with author's permission.

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