Six Crucial Steps to Take Before You Select Your Broker

When you make big, financial decisions in your life, you

usually weigh all the options and consider all consequences

before you jump in feet first, right? Making an investment

is no different.

Before making an investment, you must decide which brokerage

firm or broker/dealer and stockbroker, account executive, or

registered representative to use. Before you make those

decisions, though, here are six steps you should take:

-- Think through your financial objectives carefully, and



prepare a personal financial profile.

-- Talk with stockbrokers at several firms. Schedule a

meeting with them face to face at their offices, if

possible. Ask them about their investment experience,

professional background, and education.

-- Determine whether you need the services of a full service

or a discount brokerage firm. A full service firm typically

provides execution services, recommendations, investment

advice, and research support. A discount broker generally

-- Understand how the stockbroker gets paid. Ask for a copy

of the firm's commission schedule. Firms generally pay sales

staff based on the amount of money invested by a customer

and the number of transactions done in a customer's account.

More compensation may be paid to a stockbroker for selling a

firm's own investment products. Ask what "fees" or "charges"

you'll be required to pay when opening, maintaining, and

closing an account.

-- Find out about the disciplinary history of any brokerage

firm and stockbroker by calling 1-800-289-9999, a toll-free

hot line operated by the National Association of Securities

Dealers, Inc. (NASD). The NASD will provide information on

disciplinary actions taken by securities regulators and

criminal authorities.

Your state securities regulator also can tell you if a

brokerage firm or stockbroker is licensed to do business in

your state. Don't skip this important step! If you do

business with an unlicensed securities broker or a firm that

later goes out of business, there may be no way for you to

recover your money, even if an arbitrator or court rules in

your favor.

-- Ask if the brokerage firm is a member of the Securities

Investor Protection Corporation (SIPC). SIPC provides

limited customer protection if a brokerage firm can't pay

their debts.

Also ask if the firm has other insurance that provides

coverage beyond the SIPC limits. SIPC does not insure

against losses due to a decline in the market value of your

securities. For further information, you can call SIPC at

(202) 371-8300.

Remember, part of making the right investment decision

involves finding the brokerage firm and the stockbroker that

best meet your personal financial needs. Don't rush. Do the

necessary background investigation on both the firm and the

stockbroker. Resist those who urge you to immediately open

an account with them.

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Kori Puckett provides more self-help and success oriented articles, which can be found at http://www.KoriPuckett.com. Find out the secrets Wall Street doesn't want you to know about, including the most common, avoidable mistakes traders make. Visit: http://invest.koripuckett.com