Even your stockbroker can dupe you. Yes. Now, ideally, your stockbroker should help you maximize your returns by identifying the best investment opportunities for you. However, there are cases when brokers end up duping you as well. Not only are they known for charging additional administrative and management fees besides their commission but they might also end up carrying out unauthorized transactions in your account. Yes, there are cases where the brokers request their clients to let them execute transactions on their behalf. At times they may go ahead with operations even if you say no, thereby causing trouble for you. There are problems and there definitely are measures to combat the same as well. So, how exactly do you go on to ensure that you are not duped by your broker? We will explore in the course of this post.
What should you do in order to ensure that you are not duped by your broker?
One of the very common mistakes committed by traders is that they end up signing their rights to their brokers. Donâ€™t do that. Brokers out there offer traders lengthy agreements that very few traders have the patience to go through. Thus, more often than imagined, the fine print is missed and traders end up heading for trouble. Let us tell you that a hassle-free agreement is not about signing your name at all the convenient places as your relationship manager directs you to do. Do it and you are well in trouble.
Establish the credentials of the broker
It is so important to ensure that you are checking the background of the brokerage firms before roping the same in. It is very important to ensure that you are actually taking the trouble to find out whether the broker you are getting on board is a reputed one or not. If you are reading brokerage reports to find out about the firms, let us tell you that you canâ€™t base your decision on reports procured from a single source. You need to go through the annual reports of the firm and track its business reports from the media itself. Talking about media, one of the broker firms to have gained immense traction in the market (according to the media) today is retail broker Degiro which offers 100% segregation of assets implying that the client faces no risk in the event of the company defaulting. Hereâ€™s what Gijs Nagel, its director has to say:
â€œThe discrepancy in market access between retail and institutional investors is completely unnecessary and nothing short of a scandal. At DEGIRO it is our mission to rectify this. The way we see it: it’s not that our fees are low, but that those of our competitors are too high! We believe this approach has fuelled our success and growth across Europe to date. All of our progress has culminated in this point, and the UK is a natural next step for us. We’re excited to be launching in Europe’s financial heart and we look forward to liberating UK investors from the hidden costs that have plagued them for so long.”
Make sure you are actually going through such nuances before you are actually committing your money.
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