{"id":3207,"date":"2014-02-18T06:49:11","date_gmt":"2014-02-18T14:49:11","guid":{"rendered":"http:\/\/staging-prblog.paladinregistry.com\/blog\/?p=3207"},"modified":"2024-08-12T07:37:22","modified_gmt":"2024-08-12T11:37:22","slug":"4-biggest-myths-stock-brokers","status":"publish","type":"post","link":"https:\/\/www.paladinregistry.com\/blog\/wall-street\/4-biggest-myths-stock-brokers\/","title":{"rendered":"The 4 Biggest Myths about Stock Brokers"},"content":{"rendered":"

\"stock<\/a>Myth #1: Brokers are trained in financial planning<\/a><\/strong>.\u00a0<\/i><\/p>\n

Becoming a licensed stock broker requires passing a standardized examination (called the \u201cSeries 7″ after the type of license it grants). This examination tests the applicant\u2019s understanding of basic securities types (common stock, bonds, options), that he knows his responsibility toward his customer, and securities laws and regulations. A broker may take additional exams to gain additional licenses (to become a manager, or an options principal, for example). None of these exams, however, confer on the applicant a knowledge of how to help a particular customer attain his or her particular goals.<\/p>\n

Think of these exams like driving tests\u2013just because you can use your turn signal and parallel park doesn\u2019t mean you can drive<\/i>.<\/p>\n

Myth #2: Any broker can sell you any investment<\/i>.<\/strong><\/p>\n

They can<\/i>, but many times they won\u2019t. Many stock brokers are there to sell you something, that \u201csomething\u201d being whatever pays the highest commissions<\/a>, what their firm has in inventory, or whatever it specializes in peddling. It may be that concentrating on a particular product, be it municipal bonds, or REITs, or options, allows a firm to specialize. But what if you don\u2019t want muni bonds, or REITs, or options, or it\u2019s not the best thing for you? Once you\u2019re in the door, many firms will sell you what they\u2019ve got, not necessarily what you need.<\/p>\n

Know who you\u2019re dealing with before you walk in.<\/p>\n

Myth #3: A nice title means a successful and knowledgeable broker<\/i>.<\/strong><\/p>\n

Just because your stock broker is a vice-president does not mean he has climbed the corporate ladder. Brokerage firms are overflowing with vice-presidents. If your broker\u2019s card says \u201cVice-president\/Investments,\u201d or \u201cSenior Vice-president\/Sales,\u201d he is not a corporate officer, he is a good salesman whose commissions reached a certain benchmark.<\/p>\n

And in line with no. 2 above, \u201cgood salesman\u201d is defined by his bosses on the basis of commissions, not by you.<\/p>\n

Myth #4: I can trust my broker because he\u2019s employed at a big firm<\/i>.<\/strong><\/p>\n

Surely a big firm has more at stake in protecting its clients; nobody wants bad publicity. Surely a big firm has lots of people watching out for bad brokers. Surely a big firm only hires the best… Surely we\u2019d all like to believe these things, but that doesn\u2019t make them true. Look at all the Wall Street scandals big firms have survived, and ask yourself why a complaint from you would make a difference. Big firms do have a lot of compliance people to look over stock brokers\u2019 shoulders, but they can\u2019t watch everyone all the time.<\/p>\n

And while firms will tell you they only hire the best, they define \u201cbest\u201d by that old measuring stick, sales.<\/p>\n

To learn more about Steve Buchwalter, visit him at<\/em> www.securitieslaw-attorney.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Myth #1: Brokers are trained in financial planning.\u00a0 Becoming a licensed stock broker requires passing a standardized examination (called the \u201cSeries 7″ after the type of license it grants). This examination tests the applicant\u2019s understanding of basic securities types (common stock, bonds, options), that he knows his responsibility toward his customer, and securities laws and regulations. A broker may take additional exams to gain additional licenses (to become a manager,<\/p>\n","protected":false},"author":34,"featured_media":3210,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-3207","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wall-street"],"yoast_head":"\nThe 4 Biggest Myths about Stock Brokers<\/title>\n<meta name=\"description\" content=\"Does a nice title mean your stock broker is knowledgeable? 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