LAP: QS-048 Considerations in Selecting a Securities Sales Agent

Objectives Describe securities sales agents. Discuss considerations in selecting a securities sales agent.

Describe securities sales agents. Objective

“Middlemen” Your link to the stock exchange Brokerage houses Banks Accounting firms Work for: Must be licensed Salespeople Insurance agencies And more

Traditional Provide research and guidance Offer other financial services High commissions  Full-service

Offer basic trading services No research or guidance Less expensive Do not solicit business  Discount

Ideal for self-directed investors 24-hour access Blurs line between full-service and discount Usually the cheapest  Online

Discuss considerations in selecting a securities sales agent. Objective

Must be willing to explain pay structure Get what you’re paying for Shop around! Factors to consider: Proper licensing Steady work history Price Education and experience Shop around!

Must provide a list of references Long-time clients are best. Factors to consider: Easy to talk to Lets you be in control Offers a written agreement Satisfied customers Comfort level

Running a back ground check Securities and Exchange Commission Central Registration Depository National Association of Securities Dealers United States

Canada Give the benefit of the doubt Canadian Securities Administrators System for Electronic Document Analysis and Retrieval Running a back ground check

Stock—per share Mutual funds—load Bonds—spread Anywhere from $5 to $200, depending on broker  Commission  Broker makes money with each transaction.

Broker is paid a certain percentage of the value of money s/he controls for you. Usually about 1.5%  Asset-management fee  Salary  Flat fee or hourly fee  Commission/fees combination  Hidden costs

Churning—recommending excessive trades to collect commission Recommending securities to receive a prize or other incentive Recommending “house” products instead of relying on research and intuition

Quick Case She’s shopping for a broker. Campbell’s Choice What type of broker would be best? What factors does she need to consider? What precautions does she need to take?

MarkED Acknowledgments Original Developers Sarah Bartlett Borich and Lelia Ventling, MarkED Version 1.0 Copyright © 2007 MarkED Resource Center

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