So Where do You go For Advice?
Quite often It can be an effective idea to use a stockbroker’s services and advice for active management of your share portfolio. It can be absolutely vital if you want to achieve steady growth in your stock portfolio.
Some traders would rather use and pay for these services a stock broker has to offer because they find themselves more comfortable making decisions about their stock choices with the interactional counseling and guidance of a licensed stockbroker.
Remember that when you are using a stockbroker for any financial guidance you must be mindful of the reality that they do get paid on a commission for these services rendered. That is why they are in the stockbroking game to make money. You have to make certain that it is not at your expense that they do so.
Sometimes a conflict of interest may arise when a stockbroker offers their services to you as a financial planner.This would be because some of their income is generated as a direct result of your investment in the stock that they broker to you .If they are an ethical stockbroker (which they usually are nowdays) you would be notified of this fact before any transactions took place.
If you on the other hand you decided to use the services of your local bank then there are some very important facts to consider. When you talk to yor bank advisor about the various options that are currently available to invest your hard earned money in, it can be almost guaranteed that they will most certainly be recommending the funds that they control themselves.
Do you think for one moment that they will be recommending another other banks portfolios? Not a chance!
If you went to a car dealer that sell Ford motor cars, would they recommend you to go and buy a Toyota? Definitely not. So therefore a stockbroker who works for bank is definitely not neutral either, their business is to make sure you invest in the shares or derivatives that make the biggest profit for them.
If you happen make a profit too, that is great but that is not their prime objective. Which in my mind it should be, for when all is said and done it is your money after all.
Enough said about the banks, let us now go back to the stockbroker.
In Australia there are various organisations set up to help the prospective trader out in their research for a reputable stockbroker. ASIC is good example. And these organisations have set rules and regulations laid out specifically about the ways stockbrokers can and shall carry out their business transactions.
Another thing to keep in mind is that the rules can also vary considerably depending upon in which country you are going to invest in . In some countries stockbrokers are permitted to have their own portfolio of stocks while the company where he also works can also have an portfolio of stocks as well.
Therefore an eventual conflict of interest will arise whenever something exceptional happens. There have been many instances where traders have suspected that they have been recommended shares in companies that possibly could be facing future problems and therefore they quite possibly could experience a drop in share price at a later date. And if this occurs then the stockbroker will want to sell off his own personal portfolio of shares before the market drops.
Unfortunately these cases are almost impossible to prove and to mitigate and win them are rarer still. The amount of stock transactions are also so immense that it is just about impossible to trace them let alone to see any pattern emerging.
Thankfully most Stockbrokers in general now days are acquitting themselves in a more professional manner and are only too aware that their business benefits the most when the financial outcome for their customers is put first and foremost.
So finally as a trader you are advised to check out and research thoroughly that a stockbroker is ethical and has your financial interest at heart and is not intent on feathering his own nest.
With that in mind, why not take a look at what Plus500 have to offer. Just click on the banner at the top of this page and find out for your self what they have to offer.