Is It Time To Fire Your Stock Broker?

The holiday season gives me the opportunity to talk to people that I normally wouldn't have the opportunity to have a conversation with. Whether it's the festive season or the spiked eggnog, people just seem more willing to open up during the holiday season.

The economic turmoil of 2008 was obviously a popular subject of our conversations. You'd really have to look hard to find someone that actually has a higher net worth than this time last year. Whether it is the real market, the job market or the stock market, most people have taken some kind of a hit this year (and in many cases, people are suffering from declines in all three markets).

I honestly couldn't believe some of the things that I was hearing when I was speaking with these people.

Brokers who are not returning calls.

Brokers that were bombarding their customers with statements when things were going well, and now that things have turned south, are suddenly not sending statements nearly as frequently.

Brokers who don't have any sort of a plan for their clients - just a hope that things start to get better.

I really don't even know where to start.

How about I start with this statement: It's OK to fire your stock broker.

Not happy with the performance over the past year? Not happy that your broker is suddenly hard to reach? Not happy because you want more timely updates on how your money is doing? Fire your broker. They work for you, not the other way around. Some brokers seem to think that their customers work for them, and that they will contact their customers when they feel like it.

No way.

Ask yourself the following questions:

1. Has my broker helped me to tailor a plan that is specific to my needs?

I've lost track of the number of retirement-age people who were put into portfolios that were far too growth-oriented. Does a teacher who is two years away from retirement really need to be investing heavily in tech companies? At some point it becomes more about capital preservation and less about long-term growth.

2. Is my broker responsive?

Are you receiving timely updates? Is your broker reachable over the phone? Are you able to schedule a meeting to go over your portfolio if you have any questions?

If your broker is a ghost, then they deserve to be fired. I'm sure that many brokers are tired of dealing with cranky customers, but you know what - that's your job, and the markets won't always be heading higher.

3. Do I feel that my broker is doing a good job?

I must have asked this question to 20 people during the holidays, and I didn't receive one positive answer. If you hired someone to cut your lawn and they weren't doing a good job, you would almost certainly fire them straight away. However, someone that is handling $200k of your money gets a pass somehow?

Let me close by saying this - there is a wealth of information available at your fingertips that will enable you to become an independent and knowledgeable investor. You really don't need a stock broker at the end of the day - a bit of faith in yourself, some hard work and an account at a discount brokerage is all you need to manage your own money.

In this day and age, we shouldn't have to accept subpar performance, especially when it comes to your hard-earned money.

Filed under: General Knowledge