Brokers and Husbands: It Pays To Pick A Good One

10 Hard Questions to Ask Your Broker and Yourself
Natalie Pace CEO & Founder, NataliePace.com



Arguably, your broker and your life partner are the two most important decisions that you’ll make in your life. (You don’t get to choose your family…) So, why do we spend so much time, attention and money on the courtship, wedding and honeymoon, and so little on finding the perfect someone to oversee the estate?

Many investors approach finding a financial professional like they do finding a job, thinking they have to sell themselves to win the relationship. Instead, you should be treating the broker as you would a fiancée. Don’t sell yourself to them. Make sure that they are worthy of you. Dig into their past. Ask the hard questions. Your life, your needs, your risk tolerance and your areas of expertise are specific to you, and if any financial professional starts laying out a cookie cutter plan for your money, that is the first red flag that you’re dealing with a salesperson, instead of a professional who is looking to develop a mutually beneficial long-term relationship.

Ideally, your certified financial planner, real estate broker and other financial professionals are here to find the perfect investments based upon your needs. So, why is it that so many of us expect them to be mind readers, and then fire them if the shoes don’t fit or the investments don’t pan out? If you’re looking for a remodel in downtown Los Angeles, you don’t want to consult an estate broker in Beverly Hills. Likewise, if you have major tax considerations and need to protect an existing portfolio, you don’t want to hand the reins to a hedge fund manager.

Is your financial planner someone you can respect, admire and honor through thick and thin? If not, you’re setting yourself up for losses, because at the first sign of real trouble, you’ll be faced with the hard truth that you knew all along—it was a bad match to begin with. You don’t want to be stuck in the foxhole with a jerk. An experienced professional will be an ally, seeing you through the hard times and drinking to success on the other side. All markets – real estate, bond and stocks – have their rallies and their pullbacks. Investing, like life, isn’t a fairy tale, but if you pick an outstanding partner, it can be a rich and rewarding adventure.

10 Things to Know About Your Broker:

1. How many years has s/he been handling portfolios and/or trading stocks and bonds?
2. What is her/his education (university)? (Brokers do not have to be college graduates)
3. What financial certifications does s/he hold?
4. What is her/his investment style?
5. What is her research criteria? (If they rely solely on "what the company tells them to pitch," they are likely more driven by company sales incentives than real gains in your portfolio.)
6. What is the performance of her client’s portfolios? (Be careful that you don’t get a bait and switch on this one, where they point you to mutual fund pie charts, where the years have been carefully selected to present a positive picture.)
7. Years of employment with current company (and where s/he worked before).
8. Any complaints filed with the NASD? (Call the NASD to verify that there haven’t been any complaints.)
9. How much time and energy will s/he give to my portfolio?
10. How many market downturns has s/he personally been through in her field? (Don’t confuse wisdom with a bull market. This would be particularly relevant to young real estate brokers right now.)

4 Questions Your Broker Should be Asking You:

1. What is your favorite investment strategy? (Do you have experience making real gains in any one sector?)
2. What is your least favorite investment strategy and why? (Do you hate the THE NASDAQ because you lost money in 2000?)
3. How is your portfolio currently positioned (diversified)?
4. What is your risk tolerance? (No investment is worth a heart attack!)

Please note that Natalie Pace and NataliePace.com are not brokerages or in the business of advising people about their personal finances. NataliePace.com offers the news and information you need to make smarter investment choices (with the help of your financial professional). Always consult financial professionals, including your accountant, before making changes to your portfolio.