With the rise of financial websites providing trading tips and tools (like ours), and books such as “deleteyourbroker.com”, many investors feel that the broker is redundant. Sure, we can all conduct our own analysis and execute trades on the platform ourselves, who needs the broker?
That’s true to a certain extent. Which is why the brokerage industry has turned into a commodity business for the most part – lowest commission wins customers. This article is to teach you how to use your stock broker. They are actually very useful!
As a retail investor, few of us have access to institutional research reports, especially those of companies which we are interested in. This is because global research houses sell these reports and no one is allowed to distribute it freely. Such reports are useful for view points of analysts, especially when they just release their analyst target prices, which can move markets. Well anyway, your broker has access to these reports. Say you have a portfolio of stocks that you want to monitor, or a new company you want to check out. Asking your broker for research reports on these companies is a good start.
As mentioned, the brokerage business has become a commodity. And brokers have to get innovative in serving their clients – that’s you. Another very useful analysis these stock brokers can do for you is comparables analysis. So if you are interested in REITs for example and want a table comparing all the REITs in your market for you to see which gives you the highest yield, your broker can do it for you.
So do tap on your stock brokers for this added advantage. Some leechers actually sign up with numerous brokerages just so they have 10 stock brokers at their service. While that is sneaky, know also that brokers keep track of how much commission you are generating for them. Sooner or later, they will realize that you are not generating much commissions for them and will ignore you.
So pick a good and resourceful stock broker, stick to him, get research and analysis from him, and give him some business for a sustainable relationship!