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

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

4. Describe securities sales agents. Objective

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

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

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

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

9. Discuss considerations in selecting a securities sales agent. Objective

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

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

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

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

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

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

16. 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 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

17. 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?

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

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