Looking for a broker can be challenging because you must trust them completely. After all, that person will deal with your investments, and you have to be certain that they have your best interest in mind. Their job is to lead you on a path of financial security and help your reach your goals.
Unfortunately, there were numerous examples of fraud in the past. This is probably your worst nightmare, and taking everything into consideration, it is completely natural for you to be suspicious. In the following article, we will deal with the topic of fraud and also provide you with some tips on how to ensure that your new partner is trustworthy.
Why is this a challenge?
We won’t discuss this matter in a great deal because you probably already have your reasons for being skeptical. Naturally, the first one is that your financial future depends on this person. Their goal may not be to trick you, but they simply may not be good at what they do. Whatever the case is, your money is at stake.
Secondly, nowadays, you have multiple options when it comes to choosing a broker. Why is this? Well, because of the Internet, and the fact you can collaborate with anyone. Yes, this is a good thing, but at the same time, you have to be really careful who you choose. Investigating each of these people is a task of its own, the one that requires a lot of effort and time.
What are the popular scams?
In order to be certain that you have made the right choice, you have to oversee the work the broker is doing closely. This is especially important at the beginning of your collaboration because trust cannot be built overnight. Here is a list of popular frauds, and if you notice any of these, you should rethink your decision.
Churning
If your broker makes multiple trades without any real purpose, you should get worried. Basically, they will start to trade frequently with the goal of increasing their commission instead of your wealth. Technically, this isn’t illegal, but it is unethical. Because of this, you have to go over all the transactions regularly. If you notice that there are many of these and that your finances haven’t really increased, you are probably a victim of this scam.
Keeping you out of loop
Brokers are required by law to have your permission before they make a purchase. It means that they have to present you with all the details about a certain trade. Not only what the purpose of it is, but also all additional information you have to know. Upon doing this, they need to get your authorization before proceeding with the transaction.
Misinterpretation
A broker should never try to influence your decision. This isn’t justifiable under any circumstances. Their job is to know your finances, your goal, and to help you achieve it. Yes, they can provide you with advice if they have strong arguments, but ultimately, the decision is yours. If you notice that they have been holding back some facts and information to get you to make a certain choice, you should reevaluate your work together and consider whether you should continue it.
Is your broker trustworthy?
Now, let us give you some tips on how to investigate this person before formally hiring them. It goes without saying that you should only consider those that possess a license.
Go over reviews
Remember when we said that one of the biggest challenges of finding a safe broker is that you have too many options and that you should blame it on the Internet? Well, the web also provides you with a significant benefit. It is a mine of information, and all you have to do is gather it.
Start by going over reviews on independent websites such as financebrokerage.com. All of these are generated from current and previous clients, meaning that you will get a pretty clear picture of who you are dealing with. Make sure to read every single comment and look for warning signs, such as similar complaints, hidden fees, and so on. What’s more, each company is rated by the clients, so obviously, you should avoid those with low ratings and negative comments. You have to understand that it is impossible to find anyone who doesn’t have a single negative review. The trick is to analyze these and understand how vital they are.
Ask for referrals
A lot of people don’t feel comfortable looking for a broker online. If this is the case with you, you should turn to friends or business partners for recommendations. These people are close to you, and they don’t have an ulterior motive to mislead you and trick you. Naturally, once you get this list of potential partners, you have to investigate each of these people before making the final decision.
Research them online
Luckily for you, today, there are many websites that are great sources of information. Since the next step is meeting with these people, you have to shorten this list even further. Start by exploring their previous work and resumes. Then, move on to the news articles to see if they were accused of fraud or any wrongdoing in the past. Trust us. You will be surprised to see what you can learn by simply typing their name into a search engine.
Conduct interviews
Obviously, you cannot hire anyone without first talking to them. Yes, their previous experiences and success rate is important, but you have to feel comfortable working with that person. This is the first step in building a trustworthy relationship.
What’s more, you have to make sure that they meet all of your requirements. Do you have specific needs? Ask them anything you want regarding the trades, and they have to be able to answer each and every one of your questions. This way, you will gather all the necessary information regarding their work and experience.
Finally, ask them about the fees and investigate how your communication will develop. When it comes to the latter, they have to be transparent, meaning that if you notice even the slightest hint of hesitation, you should probably move on to the next person.
