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- Fire Your Stockbroker! (2)
Fire Your Stockbroker! (2)
- By Davidson Okoro
- Published March 15th, 2010
- Smartmoney
- Unrated
Fire Your Stockbroker! (2)
3. Does Your Broker Update You On Your CSCS/Stock Position? Most stockbrokerage firms never give their account holders or customers an update on their account, and these investors never request too. The result of this is that most investors do not know what number of shares they have in their portfolio and the value of this portfolio. And since they do not know these numbers, they cannot speculate with the investments. They just watch the stocks fall and rise at critical times. With the advent of the e-statement introduced by the CSCS, it is now possible to view your account from your computer, if it connected to the Internet. Most brokerage firms enable the investors obtain this too, while others do not. Check out if your broker is one of those who are non-chalant towards monitoring your portfolio.
4. Does Your Broker Answer Your Trade Enquiries, and on Time too? Many brokers, I learnt, will never reply their clients, be they enquiry by telephone, email, postal mail, or other direct correspondence methods. I cannot understand why this is so. I have knowledge of clients who live in Eastern parts of Nigeria but run brokerage accounts in companies in Western Nigeria. One would not expect the investor to visit, say, Lagos each and every time he wants to make a trade deal. It could be done via fax, email, telephone. Postal mail or courier. How would you feel, if you expend such financial and human resource to get across to your broker, only to discover that the dumped your letter somewhere in the floor. Such is what some investors go through. Does your broker treat you this way?
5. Does Your Broker Have A Research Unit? You cannot under-estimate the importance of research in your investment career. You need to arm yourself with what is happening in the stock market, and arm yourself well. Research is vital as the in-house stock and investment analyst working at these brokerage firms have all the numbers to decide if a company is a good or bad buy and should communicate that to you. They should be able to analyse quarterly, semi-annual and annual reports and other financials of quoted companies and determine whether you should buy, sell or hold their stocks. Unfortunately, most brokerage firms do not prioritize this and hence leave these decisions in the hands of the investor who usually have little or no knowledge of these investment fundamentals. The effect of this is that most investment decisions are based on emotion rather than logic and empirical data. This usually brings a negative effect on the overall size of the investors’ portfolio. Is your investor like that?
6. Are There A Lot of Complaints Brought Before Your Broker? Once I was in a broker’s office for a business transaction. But it took a long time before I was attended to. And when it was done, it was done in a poor manner. What preceded my attendance was the incessant request for redress brought about by the investors who have line up in a very long queue. And worst still, some of these complaints were brought over the telephone by investors calling from outside the office. No matter how serious I made them understand the nature of my visit was, they were first and foremost wearied by those telephone calls. Did they address the issues perfectly? Your guess is as good as mine.
7. Is Your Brokerage Firm In Good Standing With the Regulating Authorities? Regulating authorities include the SEC, the NSE, the CSCS etc. There are caseloads of financial misdeameanour perpetrated by some stockbrokerage firms chronicled at these authorities. Some of them include financial misappropriation, forgery of clients’ share certificates, non-payment of sales proceeds, non-regularity of licences etc. Have you found out if your broker is not listed among these defaulters. It is a tell-tale sign to be cautious of where your portfolio is held.
Now grade your broker. If your answer to Questions 1-7 is a good note for your broker, then score it 1 point. If your broker did well in all the questions, then score it a “7” points. If it failed in all the questions, score it “0”.You can equally score it between “1” and “7” points. If you have two brokers, for instance, try and see which one scored higher than the other. The one that scored higher is a better broker, and you may consider “firing” the other, if you deem it necessary.
3. Does Your Broker Update You On Your CSCS/Stock Position? Most stockbrokerage firms never give their account holders or customers an update on their account, and these investors never request too. The result of this is that most investors do not know what number of shares they have in their portfolio and the value of this portfolio. And since they do not know these numbers, they cannot speculate with the investments. They just watch the stocks fall and rise at critical times. With the advent of the e-statement introduced by the CSCS, it is now possible to view your account from your computer, if it connected to the Internet. Most brokerage firms enable the investors obtain this too, while others do not. Check out if your broker is one of those who are non-chalant towards monitoring your portfolio.
4. Does Your Broker Answer Your Trade Enquiries, and on Time too? Many brokers, I learnt, will never reply their clients, be they enquiry by telephone, email, postal mail, or other direct correspondence methods. I cannot understand why this is so. I have knowledge of clients who live in Eastern parts of Nigeria but run brokerage accounts in companies in Western Nigeria. One would not expect the investor to visit, say, Lagos each and every time he wants to make a trade deal. It could be done via fax, email, telephone. Postal mail or courier. How would you feel, if you expend such financial and human resource to get across to your broker, only to discover that the dumped your letter somewhere in the floor. Such is what some investors go through. Does your broker treat you this way?
5. Does Your Broker Have A Research Unit? You cannot under-estimate the importance of research in your investment career. You need to arm yourself with what is happening in the stock market, and arm yourself well. Research is vital as the in-house stock and investment analyst working at these brokerage firms have all the numbers to decide if a company is a good or bad buy and should communicate that to you. They should be able to analyse quarterly, semi-annual and annual reports and other financials of quoted companies and determine whether you should buy, sell or hold their stocks. Unfortunately, most brokerage firms do not prioritize this and hence leave these decisions in the hands of the investor who usually have little or no knowledge of these investment fundamentals. The effect of this is that most investment decisions are based on emotion rather than logic and empirical data. This usually brings a negative effect on the overall size of the investors’ portfolio. Is your investor like that?
6. Are There A Lot of Complaints Brought Before Your Broker? Once I was in a broker’s office for a business transaction. But it took a long time before I was attended to. And when it was done, it was done in a poor manner. What preceded my attendance was the incessant request for redress brought about by the investors who have line up in a very long queue. And worst still, some of these complaints were brought over the telephone by investors calling from outside the office. No matter how serious I made them understand the nature of my visit was, they were first and foremost wearied by those telephone calls. Did they address the issues perfectly? Your guess is as good as mine.
7. Is Your Brokerage Firm In Good Standing With the Regulating Authorities? Regulating authorities include the SEC, the NSE, the CSCS etc. There are caseloads of financial misdeameanour perpetrated by some stockbrokerage firms chronicled at these authorities. Some of them include financial misappropriation, forgery of clients’ share certificates, non-payment of sales proceeds, non-regularity of licences etc. Have you found out if your broker is not listed among these defaulters. It is a tell-tale sign to be cautious of where your portfolio is held.
Now grade your broker. If your answer to Questions 1-7 is a good note for your broker, then score it 1 point. If your broker did well in all the questions, then score it a “7” points. If it failed in all the questions, score it “0”.You can equally score it between “1” and “7” points. If you have two brokers, for instance, try and see which one scored higher than the other. The one that scored higher is a better broker, and you may consider “firing” the other, if you deem it necessary.
