Things to consider before selecting a Stock broker

One thing that the roller coaster stock market of 2020 taught us is to handle our finances smartly and be prepared for the worst. First week of 2021 and Elon Musk already bagged the position of the richest man in the world. Stocks of Amazon dropped down while stocks of other leading corporations have been fluctuating like an old boat ready to go down in the middle of the ocean. 

While most of us try to be as careful as possible in taking financial decisions, sometimes it is best to seek help from a professional in order to stay afloat in the high tide stock market. When an individual invests into stock market, he/she expects good returns out of it. However, in order to optimize those returns on your investment, it is super crucial to choose the best available financial broker. After all, the returns are all that got you into investment in the first place. 

In this article, we will walk you down to the basics to keep in mind while choosing a stock broker. With the advent of technology and digitization, there are a lot of options available in the market to choose from. Hence it becomes very important to select a broker that will not only manage your money but will also help you to get fruitful returns from your investments. 

We dived deep into the subject and here are the points that one should consider before selecting a broker:

1. UNDERSTAND YOUR FINANCIAL NEEDS

This is a super basic thing that an individual needs to access and understand on their own. Gauge your expenditure, investments and properties and come to a conclusion regarding the need for hiring a broker.  A broker can help you invest your money, handle your finances, give financial advice for the upcoming term, help you with your expenditures and tax planning for the financial year. Decide on what is your current need and select a broker who offers the best service on what you're seeking. Keep in mind that having a clear idea of what you want is very essential in order to manage finances and keep your money game up. After all, nobody wants to be a subject to risk from being under planned or from having half knowledge. 

2.  BROKER QUALIFICATION

All the share brokers in India are governed by the Securities and Exchange board of India Act, 1992. Therefore all the stock brokers in the Indian market must be register with the Securities and Exchange Board of India. Make sure that the broker you want to hire has a proper license and is registered with Securities and Exchange Board. Check the previous work history of the broker and see whether his/her previous employment adds value to his/her service. Ask if he/she has recommendations or referrals from previous employer or any government handled firms. 

TIP: Recommendations are the most safe and easy way to understand work history of any broker. 

3. EXPERIENCE IN THE MARKET

As discussed before in this article, we will always recommend you to check the work history of the financial broker you want to hire. In many cases, people change their line of work and choose financial market in the search for money and better living. Therefore, it is of utmost importance to check the work history of an individual. Check whether the previous work of the individual adds value to his/her current service. We will also recommend you to ask questions to the broker regarding your financial scenarios and financial goals and see if their answer satisfies you enough to hire them. Sometimes even though an individual comes from a diff work background, his/her expertise on the subject makes it up for the lack of a huge experience. In such scenarios, you should be able to make a decision if you want to go for his/her service.  Everybody starts at some point and the experience holders were once new in the market. Go with the gut feeling after gauging the person.  Note: Are you still confused and wondering how you can Find the best broker. Don't worry, because we come up with the Select by Finology. With the help of advanced features and unbiased reviews on Select, open an investment account that suits your needs and get rewarded as well.

4. EXPERTISE IN THE FIELD

Having a good experience in the market is one thing while having expertise is another. Most of the brokers have a good expertise on two or three areas in the financial accounting. It is you who have to select somebody who has his/her expertise on financial areas depending on your own financial demands. Realistically, it all circles back to your own financial demands and goals. Try and choose somebody who has expertise in accordance to your financial goals.

TIP: If your primary interest is in buying and selling stocks and bonds, you would want to choose a registered investment advisor (RIA) or a registered representative of a stock brokerage firm. They are safe and usually have good expertise on buying and selling stocks.

5.  FEES OR COMISSION COST

Many brokers charge fees for their service while others take commission from the financial gains of their clients.  Before engaging into business with a broker, it is always advised to clear if he/she will ask for fee or commission from a financial gain or both. Transparency is the key to having a long term financial relation with the broker. A good broker will be very clear about his/her demands in returns for the services. To be extra careful, you can also check the track record of the broker to see if there was any clash with the client regarding money. Financial disturbance with the broker can become ugly very easily and is something that can be avoided with minimum efforts. Speak out your demands and understand how the broker would like to be paid. 

TIP: Once decided on the paying terms, you may also have it written down on a bond paper as a sign of agreement to avoid hassle in future. Not a lot of people prefer it written down on papers but it's better to be safe than sorry. 

6. ADAPTABILITY

Being on the same bus with the broker is very important if you want to yield good financial gains. It is your responsibility to talk to the broker and make him/her understand what you seek in the current financial year. Talk to them about your investments, future plans of investments, financial goals and saving plans. Understand that a broker will be able to help you only if he/she understands what exactly you need and seek. Similarly, every time you receive any advice from the broker, understand it thoroughly and check if it meets your goals and demands. If you feel that the financial advice will be helpful for you, use it in accordance to the broker. This forms a bond between the broker and the client based on adaptability and compatibility.  Note: Get the unbiased review of Zerodha and check its trading app, Demat account opening charges, brokerage, margin, plans, features, investment option, ratings & review.

7. TRUST AND AVAILABILITY 

In a financial relationship, trustworthiness is an absolute non-negotiable element. You cannot let your money into somebody's hands who is unethical or lacks integrity. There is no absolute way to check if somebody practices unethical measures, therefore check the track record of the individual to check for any possible unethical incidences. 

Moreover, in the current pandemic times where everything has become 'online', check for the availability of the broker and fix your appointments with him/her in advance. This will simply make it easier for both, the broker and the client to manage time and finances. This will also ensure the timely execution of orders and shall be very beneficial for financial returns as stocks are very volatile in nature and often fluctuates in short period of time. 

TIP: Some brokers charge their clients fees from time to time in the name of additional services or expenses. Be clear about your finances and ask for any additional fees that you might have to pay in future.  Also ask the broker about the minimum balance that needs to be present in the brokerage account in prior.

8: BACKGROUND CHECK

Although we have mentioned several times to check the history of the broker, it is very essential to run a quick background check on the individual. You can reach out to the agency of the broker or find help on Google or Quora. May times, people post reviews about the financial brokers over the internet and giving them a read is only making sure you don't step into muddy waters. If anything, you might come across some good reviews for your broker hence proving that you took a good decision. After all, a simple Google check would not hurt us, right!

Given above are some of the important things to keep in mind before taking the broker into your financial picture.  Make sure you tick the above list before hiring somebody for your financial needs. After all, it is your hard earned money and you need somebody who will play your finances safely while reaping you financial benefits. 

It is also advised to be financially alert and understand the market. This will only help you to understand how the finances are going and will make you capable enough to take your decisions.