Signs You May Have a Bad Broker

by admin | December 21, 2017 1:43 pm

Hiring a stock broker to handle your investments may be like second nature to you. After all, you’re a busy professional yourself. You don’t have time to juggle the intricacies of the stock market because you’re too busy at work, going to school or getting in enough family time. Well, that may be all well and good, but don’t let your guard down when it comes to trusting your broker. Most are professionals and do their jobs with their clients’ best interested in mind, but some have ulterior motives. Sadly, many bad stock brokers use perfectly legal means to prey on the weaknesses and whims of their clients.

Check out these signs you may have a bad broker.

Stability over Growth

Particularly after a stock market crash or downturn in the market, investors understandably get a little gun shy. This sensitivity to risk is what bad stock brokers prey on, appeasing that fear with strategies they build up as being extremely stable. Portfolio stability of this kind takes money. Much more of it – so much so that any long-term profit that may be realized in a perfect world is then eliminated due to this laid-back approach. You’re left with a too-tame portfolio that won’t carry you through retirement, and your broker profits from the extra cash. Most of these strategies involve stocks and bonds, but some may have to do with structured investments like high-fee insurance.

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Selling Dividends

When a broker buys a stock because it’s about to pay out a dividend, this is referred to as selling dividends. If you’re approached about this type of investment, perk up your ears because you’re likely being pitched a bogus idea. First off, you should never buy something without rushing into it and conducting the proper research. Chasing dividends is one strategy your broker may employ that could work out one time on a strong stock, but what about the next time when it turns out to be a weak stock? Watch your stock plummet. Your broker gets the commission while you’re left with an investment that made nothing, or even ended up costing you a few bucks.

Questionable Advice

Unethical brokers can make or break your investment plan, doing a lot of damage in a short period of time. Whether on purpose or just because they’re not very good at what they do, some brokers may steer you wrong by giving you the wrong advice for your portfolio. Perhaps they talk up a particular stock to get you interested and just won’t let it go. Question their motives in anything that seems hinky or just not right for your financial goals. Be leery of any broker that encourages you to put all your eggs in one basket, as this can land you in hot water later yet spell higher commissions for them.

If you suspect your stock broker is making bad investments on your behalf, you need a securities fraud lawyer[1] on your side to protect your assets. Thomas Law Group has been at this since 1991 recovering losses for investors just likeyou.

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