What Is The Best Question To Ask A Stockbroker?
Is there one question to ask a stockbroker that is more important than any other?
In truth, this is a hard question to answer. Without doubt, there are some important things that a client should know and understand before making an investment.
For example, it is very important that an investor understands the mechanisms of the trade. This will include knowing on what day money will be used or deposited in his or her bank account. If the correct funds are not available, the trade will be unlikely to be completed and the investor will pay a penalty or fine.
If there is paperwork to be completed, or more usually signed, by the client, it is important that he or she knows how quickly it must be returned to the brokerage. Again, late documents from a client can delay or cancel a trade and this can result in a fine being charged to the client.
A vital question to ask a stockbroker is that fees and charges are explained. These charges may include taxes. In many countries, Stamp Duty is charged on purchase of assets. Generally, no tax is levied at disposal, though depending upon the financial situation of the investor, Capital Gains Tax is a possibility.
Should the investor be trading in assets located in another jurisdiction, it is highly likely that fees will be higher than a trade 'at home' and that an additional Withholding Tax wil be charged. Again, this will depend upon many factors, but is certainly worth investigating.
It is also worth investigating in advance of a purchase about the type of shares available. It is often the case that a quoted company will have more than one class of holding.
There will generally be 'common' or 'ordinary' shares / stock, but there may also be 'preferred' or 'zero dividend' and more. Each of these types of holding represents different rights and benefits. You should know what you want before you call and ask.
It is worth adding, that many people avoid internet stockbrokers for the simple reason that they have no-one to ask a question of and confirm or reassure them that the transaction is proceeding smoothly. Some of us like a voice on the end of a phone! If you have a question to ask a stockbroker, it is good to have someone to answer for you.
After all of this though, it is worth remembering that investing via a stockbroker is a matter of trust - the more the brokerage provides you, the more trust you need to have. So we feel that the best question is not one that you ask a stockbroker, but rather one that you ask of yourself about the stockbroker...
Do you feel able to trust them? Without trust, the relationship - and probably your investments - will be unlikely to flourish.
Also related to this topic are:
How To Choose A Stockbroker
For details about the different types of stockbroker service, please see:
Execution Only Stockbroker
Advisory Management Stockbroker
Discretionary Management Stockbroker