Questions to ask a new broker

[Cooper]

My stockbroker of many years is leaving the firm. He took good care of me and I had full confidence in his recommendations.

A new broker from the same firm has been assigned to tentatively manage my account. She has reviewed my portfolio and asked to set up an appointment to meet.  In preparing for this meeting I’m working on a list of questions to ask her. Since I haven’t interviewed a broker in many years could some of you suggest  questions I should ask. Thanks 🙏 

[KeepItReal]

18 minutes ago, Cooper said:

My stockbroker of many years is leaving the firm. He took good care of me and I had full confidence in his recommendations.

A new broker from the same firm has been assigned to tentatively manage my account. She has reviewed my portfolio and asked to set up an appointment to meet.  In preparing for this meeting I’m working on a list of questions to ask her. Since I haven’t interviewed a broker in many years could some of you suggest  questions I should ask. Thanks 🙏 

For me, the biggest consideration for a first meeting is "does the broker understand and embrace my investment style".  I want to make sure we can agree on what the forest looks like before we start looking at any individual trees. 

Once I am ready to look at the trees, so to speak, ask the broker to "use a fresh set of eyes" and to identify any immediate changes to propose. If the broker comes up with too many changes, for me that is a red flag...I was comfortable with what I had and wholesale change proposals means we do not have a meeting of the minds and nothing scares me more than an over aggressive broker. The new broker should not be suggesting anything but a tweak here or there and should be able to explain to you why. Good luck and I hope it works out! 

[MscleLovr]

1 hour ago, Cooper said:

• My stockbroker of many years is leaving the firm… I had full confidence in his recommendations.

A couple of years ago, I had the same sort of ‘transition’ @Cooper when my stockbroker died, aged 84. I didn’t ask questions as you suggested, but I outlined my stance on investment. My firm beliefs are:

• I want my money in equities managed conservatively,
• I want to be invested fully at all times, and 
• I believe in progress, not activity 

So I want to be consulted before any sale or any purchase. 
 

1 hour ago, KeepItReal said:

nothing scares me more than an over aggressive broker.

I agree. Two replacements were proposed to me: the first seemed to be keen on every ‘hot’ stock, while the second had a more thoughtful approach. I talked to the second about the importance I attach to stock selection, and then letting compound arithmetic do its work. I told him he could sell any stock if he felt it was fully valued but he had to discuss it with me first. For the last 2 years it has worked quite well. 

[+ Charlie]

Cooper, I feel your anxiety. Last year our independent financial advisor, Nick, who had handled our accounts since 1985, retired, but he advised us to switch to a younger independent financial advisor, whom he had known and sometimes worked with for many years, in whom he had total confidence. He told the new guy exactly what we were like and what we were used to, and when I spoke with him, I got the same vibe that I had always had from Nick. He actually keeps us as regularly advised about what he is doing as Nick did, and after almost 6 months, I have seen nothing to make me regret the change. The key is definitely full communication about what you want and are comfortable with.

[+ Vegas_Millennial]

This advise mostly applies to interviewing a financial advisor, but I suppose it could be adapted to brokers as well:

1. How are you paid?  (If she won't tell you clearly, run.  If she receives commissions from companies or products instead of from you, then she has an incentive to be biased towards products with higher comissions)

2. How were you invested before and after the 2009 crash?  (If she's too young to have been working at that time, find someone else.  Anyone can make money when stocks are going up.  You want to find someone who didn't panic and had a strategy that you can agree with before, during, and after a major recession)

3.  Listen to the questions she asks YOU.  (What are your goals?  Are you married?  Will you be moving?  What are your sources of income (rental homes, pensions, part time jobs)? Do you want to leave a legacy through charitable giving? Do you have other people who are dependent upon you for income?  If she doesn't ask these things and goes right into suggestions to change your portfolio, leave.  She needs to know the entire picture of your life and estate goals before she can adequately advise)

[+ augustus]

@Cooper Be very careful.  These folks make money on commissions.  They will always push annuities, which may or may not be a good deal for.  If you still need tax deferral, then it's an option.  Blue chip mutual funds and cash are the best I believe. 

And beware of "managed funds".  My aunt when she was in her 80's was convinced by a broker at Charles Schawb to invest in a managed fund, mostly commodities, which is outrageous for someone her age.  He promised that there would be no losses in the managed fund because of the use of derivatives, which turned out to be true but her return was only 2% for each of the 2 years she was invested.  The S&P 500 rose by double digits in each of those 2 years.  I found out that the brokers commission was 1% of all the money she had in that fund (about 800k), as opposed to a commission of 1/10th of 1% if she were just in mutual funds.

[Guest]

The most important rules for investing are (1) diversification, (2) watch the fees (invest in low-cost, broad-based funds), and (3) invest according to your time horizon. Never try to time the market. If you don't need the money for 10 years, it mostly belongs in the stock market. Laddered bonds for money you'll need sooner. 

[Cooper]

Here we go again! After just 1 year of working with a new broker I get a call that she has left the firm. Apparently, brokers aren’t permitted to inform their clients that they’re leaving  until after the fact.

My last broker contacted me after he left the firm and wanted me to move my account to him. After meeting with a few new potential brokers I decided to stay with the firm as the new broker was very knowledgeable, had a good track record, and we had a lot in common. 

I was told by the firm that I’d be contacted by a new broker to set up an appointment  to interview him/her. And, if it weren’t a good match other brokers would contact me. 

I just reviewed the excellent replies in this thread, however, if you can think of anything else I should ask, please just post. I’d be interested in hearing what investments this broker suggests during these rocky times. 

[Guest]

7 hours ago, Cooper said:

Here we go again!...

Yes, your choices are to follow your broker/advisor to the new firm or stay with the firm and switch brokers. If you switch firms, there will be a fee, which you should inquire about. You should also ask about the fee structure for the new firm. Did the broker leave because the new firm has higher fees/expenses, which translate to more pay for the broker?

[GTMike]

11 hours ago, Cooper said:

Here we go again! After just 1 year of working with a new broker I get a call that she has left the firm. Apparently, brokers aren’t permitted to inform their clients that they’re leaving  until after the fact.

My last broker contacted me after he left the firm and wanted me to move my account to him. After meeting with a few new potential brokers I decided to stay with the firm as the new broker was very knowledgeable, had a good track record, and we had a lot in common. 

I was told by the firm that I’d be contacted by a new broker to set up an appointment  to interview him/her. And, if it weren’t a good match other brokers would contact me. 

I just reviewed the excellent replies in this thread, however, if you can think of anything else I should ask, please just post. I’d be interested in hearing what investments this broker suggests during these rocky times. 

If you'd like to discuss over PM depending on what your situation/investment goals and criteria is I could have possible alternative suggestions to consider.

[Cooper]

13 hours ago, GTMike said:

If you'd like to discuss over PM depending on what your situation/investment goals and criteria is I could have possible alternative suggestions to consider.

@GTMike, Thanks for the thoughtful offer but I’m staying with my current firm. I have an appointment this week to interview a new broker. I hope it goes well. 🤞🏼 

[GTMike]

5 hours ago, Cooper said:

@GTMike, Thanks for the thoughtful offer but I’m staying with my current firm. I have an appointment this week to interview a new broker. I hope it goes well. 🤞🏼 

Yep all good! 

[Cooper]

My search for a new broker has come to an end! 🙏

During the past week I interviewed with a few potential brokers. I wanted to stay with my current brokerage house which is in my neighborhood.

My original broker called to see if I wanted to move my account to her but I never heard of the  company she joined. By chance, I was talking with a business associate about my dilemma and he mentioned someone that he thought  I might already know who works there and lives in my neighborhood. 

I called, spoke with the “Group” he’s part of  and had a wonderful conversation. Since I have several different types of accounts he had some good ideas as how to maximize the potential of each. We’re meeting for lunch next week to get better acquainted. 

Since several of you had already suggested questions for me to ask, I’ll write them down and use them at lunch.

Thanks again to those members who replied to this thread. It’s most appreciated. 👏🏼

[BuffaloKyle]

Just let me take over your account @Cooper! I'll have us swimming in money!

  

[Cooper]

Unbelievable!

Just received a call that my new broker, of less than 2 weeks, has resigned. I now will begin all over again meeting and interviewing new candidates.

This will be my 4th broker in a year. Very hard when each broker has a different strategy for handling your portfolio. My original broker had been at this firm for 40 years, so, I’m not used to constantly breaking in new brokers. 

Since brokers are not permitted to inform their clients in advance that they are leaving, all have reached out to me asking me to follow them to their new firm. Unfortunately, they all have moved to companies I’ve never heard of. 

[BuffaloKyle]

9 minutes ago, Cooper said:

Since brokers are not permitted to inform their clients in advance that they are leaving, all have reached out to me asking me to follow them to their new firm. Unfortunately, they all have moved to companies I’ve never heard of. 

The firm you use must not be that pleasant to work for or something to keep losing all their brokers. Weird.

[Cooper]

10 minutes ago, BuffaloKyle said:

The firm you use must not be that pleasant to work for or something to keep losing all their brokers. Weird.

I said the same thing to the rep who called. 

[Guest]

23 hours ago, BuffaloKyle said:

The firm you use must not be that pleasant to work for or something to keep losing all their brokers. Weird.

I totally agree with BK. If it's 4 in less than a year at the same firm, there's something toxic about that firm. I would suck up the fees, and switch to the firm of the one you like the best (of those 4). It could be those advisors were aware of something unethical going on at that firm.

Edited May 5, 2023 by Unicorn

[BuffaloKyle]

24 minutes ago, Unicorn said:

I totally agree with BK. If it's 4 in less than a year at the same firm, there's something toxic about that firm. I would suck up the fees, and switch to the firm of the one you like the best (of those 4). It could be those advisors were aware of something unethical going on at that firm.

The only other thing I can think of is it's the easiest place to get into for a first time broker and once they have it on their resume they can latch on somewhere else.

[Guest]

18 minutes ago, BuffaloKyle said:

The only other thing I can think of is it's the easiest place to get into for a first time broker and once they have it on their resume they can latch on somewhere else.

Yes, if those 4 were young, inexperienced advisors, then that could be the case.

 

[Cooper]

Obviously, I’m going to have a new set of questions as I meet & interview with new brokers. Two of my previous brokers have spoken to me and offered their services if I choose to follow them. 

[sutherland]

I used to listen to Ric Edelman's radio program religiously. He always said to ask a new broker if he/she is a fiduciary (check with finra). You need a broker who takes a flat fee and does not get a commission.

[+ FrankR]

8 minutes ago, sutherland said:

I used to listen to Ric Edelman's radio program religiously. He always said to ask a new broker if he/she is a fiduciary (check with finra). You need a broker who takes a flat fee and does not get a commission.

⬆️ They are surprisingly hard to find. Flat fee is not nearly as lucrative. 

[+ The Big Guy]

11 hours ago, FrankR said:

⬆️ They are surprisingly hard to find. Flat fee is not nearly as lucrative. 

They are available but unfortunately they are expensive (usually .25 to .75 bps annually) and usually have very high minimum investment requirements.  If you find one that is a top performer they are worth it.  An alternative (if you don’t need the dividend) is to buy Berkshire B shares .  

[+ Charlie]

The revival of this thread reminded me how lucky I am to have someone who has worked out well.