Some tips on finding a broker who will help you prosper

The Ticker

November 22, 1996|By Julius Westheimer

People often ask, especially around year's end, "How do I find a good stockbroker or financial planner?"

Their reasons: "My broker did badly this year." "I want to get into stocks." "My broker talks down to me." "I want someone who has time for me, who returns calls."

To find a reliable, capable broker, ask friends, family, your accountant or lawyer whom they use. If they're happy, interview that person. Or call sales managers of local, well-known firms (see "Stock and Bond Brokers") in the Yellow Pages.

Tell them your needs and wants.

Interview several candidates and ask specific questions: "What is your education?" "How long have you been in the business?" (You want at least five years.) "What's your 'track record' in up and down markets?" (Get a consistent Dow Jones beater.)

"What is your philosophy?" "Are you a short-term trader or long-term investor?" "How often can we meet?" "Do you handle my account, or does an assistant?" "What are your fees? How do you make your money?"

Remember: A relationship with a broker is primarily a business connection, not a social one. Lunches and golf afternoons are OK, but the bottom line is how well he or she handles your money.

Stay close to your broker. As Peter Lynch asks in "One Up on Wall Street," "Why do people who wouldn't dream of filling up at the full-service pump without getting the oil checked demand nothing from brokers?"

Thirty-five years' experience taught me that customers who call from time to time, not every day, get the best results.

Be completely honest with your broker. If you ever feel pressured, say so.

Should you give your broker discretion, or insist on calls before orders are placed? I suggest discretion, within guidelines you and your broker have agreed to follow. Sometimes brokers must move quickly.

Work with your broker for two years. If results are poor, give a warning. If three years are a bust, switch brokers. There are many good advisers out there.

BROKER BITS: Should you select a full-service or discount broker? Most people do better with professional guidance. But if you make your own decisions, try a discounter -- although one full-service local broker quips, "Would you use a discount brain surgeon?"

Most times, tell your broker to buy stocks "at the market." The extra eighth or quarter you pay is tiny compared with gains you miss if you don't get your stock. If it doesn't have long-range potential, don't buy it at any price.

Many years ago, one of my biggest clients told a dinner party gathering, "I deal with Westheimer, not because he's so smart, ++ but because he keeps his mouth shut." Insist that your broker keep your relationship confidential, too.

Pub Date: 11/22/96

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