Questions to ask a new broker

[Cooper]

My stockbroker of many years is leaving the firm. He took good care of me and I had full confidence in his recommendations.

A new broker from the same firm has been assigned to tentatively manage my account. She has reviewed my portfolio and asked to set up an appointment to meet.  In preparing for this meeting I’m working on a list of questions to ask her. Since I haven’t interviewed a broker in many years could some of you suggest  questions I should ask. Thanks 🙏 

[KeepItReal]

18 minutes ago, Cooper said:

My stockbroker of many years is leaving the firm. He took good care of me and I had full confidence in his recommendations.

A new broker from the same firm has been assigned to tentatively manage my account. She has reviewed my portfolio and asked to set up an appointment to meet.  In preparing for this meeting I’m working on a list of questions to ask her. Since I haven’t interviewed a broker in many years could some of you suggest  questions I should ask. Thanks 🙏 

For me, the biggest consideration for a first meeting is "does the broker understand and embrace my investment style".  I want to make sure we can agree on what the forest looks like before we start looking at any individual trees. 

Once I am ready to look at the trees, so to speak, ask the broker to "use a fresh set of eyes" and to identify any immediate changes to propose. If the broker comes up with too many changes, for me that is a red flag...I was comfortable with what I had and wholesale change proposals means we do not have a meeting of the minds and nothing scares me more than an over aggressive broker. The new broker should not be suggesting anything but a tweak here or there and should be able to explain to you why. Good luck and I hope it works out! 

[MscleLovr]

1 hour ago, Cooper said:

• My stockbroker of many years is leaving the firm… I had full confidence in his recommendations.

A couple of years ago, I had the same sort of ‘transition’ @Cooper when my stockbroker died, aged 84. I didn’t ask questions as you suggested, but I outlined my stance on investment. My firm beliefs are:

• I want my money in equities managed conservatively,
• I want to be invested fully at all times, and 
• I believe in progress, not activity 

So I want to be consulted before any sale or any purchase. 
 

1 hour ago, KeepItReal said:

nothing scares me more than an over aggressive broker.

I agree. Two replacements were proposed to me: the first seemed to be keen on every ‘hot’ stock, while the second had a more thoughtful approach. I talked to the second about the importance I attach to stock selection, and then letting compound arithmetic do its work. I told him he could sell any stock if he felt it was fully valued but he had to discuss it with me first. For the last 2 years it has worked quite well. 

[+ Charlie]

Cooper, I feel your anxiety. Last year our independent financial advisor, Nick, who had handled our accounts since 1985, retired, but he advised us to switch to a younger independent financial advisor, whom he had known and sometimes worked with for many years, in whom he had total confidence. He told the new guy exactly what we were like and what we were used to, and when I spoke with him, I got the same vibe that I had always had from Nick. He actually keeps us as regularly advised about what he is doing as Nick did, and after almost 6 months, I have seen nothing to make me regret the change. The key is definitely full communication about what you want and are comfortable with.

[+ Vegas777]

This advise mostly applies to interviewing a financial advisor, but I suppose it could be adapted to brokers as well:

1. How are you paid?  (If she won't tell you clearly, run.  If she receives commissions from companies or products instead of from you, then she has an incentive to be biased towards products with higher comissions)

2. How were you invested before and after the 2009 crash?  (If she's too young to have been working at that time, find someone else.  Anyone can make money when stocks are going up.  You want to find someone who didn't panic and had a strategy that you can agree with before, during, and after a major recession)

3.  Listen to the questions she asks YOU.  (What are your goals?  Are you married?  Will you be moving?  What are your sources of income (rental homes, pensions, part time jobs)? Do you want to leave a legacy through charitable giving? Do you have other people who are dependent upon you for income?  If she doesn't ask these things and goes right into suggestions to change your portfolio, leave.  She needs to know the entire picture of your life and estate goals before she can adequately advise)

[+ augustus]

@Cooper Be very careful.  These folks make money on commissions.  They will always push annuities, which may or may not be a good deal for.  If you still need tax deferral, then it's an option.  Blue chip mutual funds and cash are the best I believe. 

And beware of "managed funds".  My aunt when she was in her 80's was convinced by a broker at Charles Schawb to invest in a managed fund, mostly commodities, which is outrageous for someone her age.  He promised that there would be no losses in the managed fund because of the use of derivatives, which turned out to be true but her return was only 2% for each of the 2 years she was invested.  The S&P 500 rose by double digits in each of those 2 years.  I found out that the brokers commission was 1% of all the money she had in that fund (about 800k), as opposed to a commission of 1/10th of 1% if she were just in mutual funds.

[+ Unicorn]

The most important rules for investing are (1) diversification, (2) watch the fees (invest in low-cost, broad-based funds), and (3) invest according to your time horizon. Never try to time the market. If you don't need the money for 10 years, it mostly belongs in the stock market. Laddered bonds for money you'll need sooner.