In a recent post talking about agents and brokers, I forgot to mention the area of financial investing.  If you have an IRA account, a 401(k) at your job, or have some experience playing the stock market game then you may be familiar with using brokers.  Much like an insurance broker the financial broker works as an agent on your behalf, trading stocks, bonds or other financial instruments with the goal of helping you make the most money possible or doing what is in your best interest.  A good broker should not have a vested interest in the commodities they are trading for you.  They are supposed to be neutral and should work at your discretion.  They must be licensed and registered with the Securities and Exchange Commission (SEC).

With the thousands of brokers out there and because it is your money choosing a broker is not only important but critical to your financial health.  If you ever watched the movie Boiler Room you see what can happen if you get tied up with a shady broker.  How do you guard against this?  One of the ways is to use FINRA Broker Check.  To best describe what they do I will take a quote right off of their website. “BrokerCheck is a free tool to help investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers. It should be the first resource investors turn to when choosing whether to do business or continue to do business with a particular broker or brokerage firm.”

I decided to check out the brokerage firm that I currently have my IRA account with.  To begin a search all you do is put in the name of the broker or brokerage firm.  You do have to agree to the terms and conditions and then hit enter.  The first page that pops up will give you some general information about the particular firm or broker such as the profile, history and whether they are currently suspended with any regulator.  It was refreshing to know that my firm is not currently suspended with any regulator.  From there you can drill deeper and get a more detailed report so that’s what I did.

Well when they say detailed report they didn’t lie.  I now had a 108 page report in front of me all about my brokerage firm.  In this report you will get detailed listings of the owners of the company and much more information about the history and operations.  What was of particular interest to me were the sections talking about arbitration awards, disciplinary and regulatory events.  I looked closely at this section just to get an idea if there was any previous shady action going on that would concern me.  Though there were some events on the list there was nothing there that really was of great concern.  Most were very minor things that could even fall under the category of “misunderstandings” between the broker and the customer.  Overall I was satisfied and glad to know that my IRA and other investments are being housed with a reputable firm.  In a way I am glad because if they weren’t then I would have to find another brokerage house which I wasn’t really thinking about doing right now.  However if I did have to find another one at least I know where to go to get all of the information on the new firm.