How to Choose an Investment Broker

An investor who does not want to manage a portfolio may want to hire an investment broker. Brokers charge a fee for their services, so the investor will need to be comfortable paying for money management. Choosing a broker who has a long track record is often the best way to proceed.

1. Ask a trusted source to refer an investment broker. Family members, your accountant or your banker are some sources to consider. Ask your source how the broker’s annual returns are to see if you want to arrange a meeting.


2. Look in the phone book to find investment brokers in the city. If you cannot get a recommendation from someone you trust, contact a broker in the phone book to make an appointment. Choose a firm that has been in business for awhile instead of a new firm that is still establishing a track record.


3. Meet with the investment broker you choose. Find out the broker’s qualifications and also the firm's investment return history. Go over the fees that the broker charges for managing your funds. Ask the broker to explain the firm’s investment philosophy. For example, find out how much the broker usually allocates to stocks, bonds or mutual funds.


4. Let the broker know your long-term investment goals. The broker needs to know your future goals in order to construct the proper portfolio for your financial situation. Go over your risk tolerance for certain investments as well. For example, if you do not like investing in individual stocks, tell the broker that you prefer to invest in various mutual funds.


5. Find out the minimum investment that the broker requires. Some brokers will not accept clients unless they have a certain dollar amount to invest. You should also find out how accessible your funds are in case you need to withdraw a portion of your funds.