There is a six-month time limit for making claims; if this expires, you have to approach the general courts, which is very time-consuming. Stock exchanges award claims within four months. Thus, contracts may be issued only by brokers and payment of securities and money should be in his name and account only. A broker cannot be held responsible for payments made in the name of sub-brokers and securities delivered in an account other than his own.

The next important criterion is the quality and impartiality of advice given by the broker and his method of delivering it. Investors often want investment tips. Those that have a trading mentality want several technical calls during the day. Check the infrastructure used by the broker for giving advice. Some brokers would employ a full-fledged research analyst to analyze companies and give advice while others tend to merely pass on what is called market information. Advice, backed by a written communication, explaining the logic behind the recommendation, should be sought. Nearly 95 per cent of advice given pertains to buying; selling recommendations are rare. Therefore, the decision to sell should always be yours. The broker does not always know whether you have acted on his advice; hence, he does not keep track of your portfolio. If the broker is a portfolio manager also, then his duties are different. It is necessary to understand the difference between a broker giving advice as a value-added service and a portfolio manager.

Leave a Reply

Your email address will not be published.