Comments on: How to choose a stock broker http://www.investizmo.com/2008/04/18/how-to-choose-a-stock-broker/ Tue, 28 Apr 2009 03:56:29 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: iGuru http://www.investizmo.com/2008/04/18/how-to-choose-a-stock-broker/comment-page-1/#comment-10 iGuru Wed, 23 Apr 2008 15:01:20 +0000 http://www.investizmo.com/index.php/?p=27#comment-10 <p>Thank you for your comment DanielC, <br /><br />I will have to respectfully disagree.<br /><br />Brokers are required to have clients complete KYC (know your client) documentation. In this document the client will be outlining their goals and how much risk they want to take on. A high risk portfolio for an elderly client would be a clear violation and should send alarm bells off. <br /><br />Also, if a broker decided to go high risk in hopes that the portfolio will grow quickly and bring in future revenue, they'd also be risking losing out big time on future revenue if the portfolio declines, and losing a client who could bring in referrals (the holy grail in asset gathering).<br /><br />In short, you describe a terrible broker, not a terrible compensation system.</p> Thank you for your comment DanielC,

I will have to respectfully disagree.

Brokers are required to have clients complete KYC (know your client) documentation. In this document the client will be outlining their goals and how much risk they want to take on. A high risk portfolio for an elderly client would be a clear violation and should send alarm bells off.

Also, if a broker decided to go high risk in hopes that the portfolio will grow quickly and bring in future revenue, they’d also be risking losing out big time on future revenue if the portfolio declines, and losing a client who could bring in referrals (the holy grail in asset gathering).

In short, you describe a terrible broker, not a terrible compensation system.

]]> By: DanielC http://www.investizmo.com/2008/04/18/how-to-choose-a-stock-broker/comment-page-1/#comment-9 DanielC Wed, 23 Apr 2008 14:27:08 +0000 http://www.investizmo.com/index.php/?p=27#comment-9 I disagree with the percentage commission idea. If the broker is paid on a percentage he will pick a portfolio that matches HIS risk-return preference rather than yours. A young broker might choose a highly risky portfolio for an elderly retired client because that portfolio suits the broker better. I disagree with the percentage commission idea. If the broker is paid on a percentage he will pick a portfolio that matches HIS risk-return preference rather than yours. A young broker might choose a highly risky portfolio for an elderly retired client because that portfolio suits the broker better.

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