It is possible, and more essential than you may think, to establish a mutually beneficial relationship with a knowledgeable, caring, and supportive broker. This is one of the most valuable human resources a trader can have on their trading-support team
The issue today is not finding a brokerage firm to do business with but finding that knowledgeable, caring, and supportive broker—an individual—to build a relationship with.
Based on my experience since 1993 as both a trader and an educator, most traders tend to make their decision as to which broker to work with by determining who charges the least amount in commission and fees.
Furthermore, many traders approach the selection of this key individual as a task to complete versus an important process in advancing their trading by not understanding how an effective working relationship with the ‘right’ broker will change the broker’s commissions and fees from an expense to an investment that should provide a substantial return.
In this article, we’ll discuss ideas you can use to select and develop an ongoing effective relationship with a broker compatible with your principles and supportive of you as a trader.
Why a live person as a broker?
Modern life is too complicated. We’re so tied up with rules, regulations, technology and numbers, we just can’t handle it alone. We sometimes need “experts” to help us through the regulatory agency jungle as well as someone who can be a ‘bridge’ to helping us learn and discover the ‘key’ people to know during our learning journey.
A ‘qualified’ broker can help us in areas where we have neither the time nor the inclination to learn everything ourselves or ‘know who’s who’ both inside and outside the trading community.
For example, the right broker can be of value to you when you’re . . .
beginning your trading career by helping you avoid costly mistakes. A knowledgeable and resourceful broker can provide insight, ideas, and introductions in a number of areas you might be unfamiliar with such as publications, educators, and software applications.
seeking specialized advice on information based on their or their firms research / experience.
trying to solve a problem – it may be new to you, but commonplace or already known by the broker or contacts within the broker’s network.
exploring different options or providing you with alternative approaches or qualified contacts to help you with your specific situation.
wanting or needing some external motivational support and encouragement – which sometimes is just the thing we need, i.e., someone who’ll listen.
When done correctly, working with and developing a win-win relationship with the right broker can mean the difference between staying in the game long enough to gain a solid foundation and blowing out prematurely.
Choosing and working with the right broker
The key to any positive broker / client relationship rests in the fact that the right broker is the one that’s right for you. Assuming appropriate expertise, the single most important factor in a mutually beneficial broker-client relationship is shared, or compatible, values. If your values are compatible with your broker’s, you will most likely enjoy the relationship as well as benefit from it. From the broker’s perspective this will benefit him or her because he will know and understand what’s important to you in the achievement of your trading goals.
Checklist For Evaluating a Potential or Present Broker. Questions to consider when researching a new broker:
In checking the broker’s references–do the results you discovered work for you?
Do you mutually share the same basic philosophy regarding your trading?
Is the quality and nature of the service worth the commission you pay?
To what degree is the broker interested in helping you with your learning process?
Does the broker understand what you want and your relationship expectations?
Do you understand and agree to meet your broker’s expectations of you?
Is the broker knowledgeable in areas other than trading? If so, what areas?
What is the broker’s training, expertise, and experience?
What is the broker’s track record for producing results for their clients?
What is the broker’s availability, accessibility, and responsiveness?
What is the broker’s attitude, overall philosophy, and work ethic?
What is the broker’s commitment to their career, i.e., investment in continuing education?
Questions to utilize in reviewing your current broker’s performance:
What has been the overall quality of the service and support performed?
Does your broker volunteer information, or simply respond to your calls / requests?
Do you need the service in its present form or can you customize it to your needs?
Does your broker help you set goals and assist you in attaining them?
Does your broker provide or offer you creative, usable new ideas?
Does your broker motivate you to greater personal trading achievement?
Does your broker anticipate problems and alert you to them before they occur?
Working With Your Broker
You’ve selected your broker; now sharing your trading goals is the next step.
If you have a project requiring input, ideas, or resources (for example, learning to use technical analysis, learning to use the Market Profile, etc.), then provide your broker with information so he or she can support your process. Obviously this is best accomplished through a meeting, if possible (preferably in person), since this relationship will ideally be long-term and mutually rewarding.
How do you maximize the benefits from such a meeting? Probably one of the most common techniques is to “brainstorm” ideas. In a brainstorming session, one must suspend criticism. Any idea is valid, no matter how crazy or off-the-wall it may seem. By suspending criticism, you are ensuring a free flow of ideas that can lead to creative solutions—since you never know where an idea may lead, any criticism is negative thinking that squelches people’s creative energies. There will be plenty of time to critically examine the ideas in the next stage, which is converting the ideas to an action plan.
This way each of you can prepare for the meeting and be much more effective. Suggestion – make it a practice to always provide an agenda prior to all of your meetings.
Agreeing On A Plan Of Action
Once you have identified ideas and strategies, you and your brokers must agree on what needs to be done to turn your shared vision into reality. The plan of action should encompass the following:
What must be done – The steps necessary to accomplish the project (if not all – then as many as known)
Who’s responsible for what and who will do what
When each step must be completed
How much it will cost
How the steps will be monitored
Next, get the plan down on paper, with a checklist of responsibilities, and a timetable for results. When this is completed, set a date for the next meeting.
If you have a values-compatible broker and have successfully brainstormed and detailed an action plan, you’re well on your way to success.
Keeping Your Plan On Track
This is usually the hardest part of any project. Fortunately, the major obstacle is usually you, and you can do something about that without a lot of advice from your broker! Remember – it’s your plan and the results you achieve will be in direct proportion to the in-vestment you make with your time, energy, and money. Especially when the project is your trading education, we believe there is no greater investment you can make.
Keep in touch with your broker frequently as you progress on your learning journey be-cause his or her feedback or objective insight can, many times, accelerate the results realized. To do this, establish some reasonable milestones or checkpoints to report your progress. Make sure you are getting open, honest, candid feedback to help you advance – the good, the bad, and the ugly. If you have a values-compatible broker this should not be an issue.
Dealing With Breakdown
There are breakdowns in any relationship, and your relationship with your broker will be no different. There will be times when communication goes awry, when deadlines are missed, and mistakes made. How you deal with these breakdowns can mean the difference between the relationship surviving or being destroyed. When a breakdown occurs, go back to the beginning and work through the steps of establishing a relationship, sharing a vision of the possible, and converting the vision to an agreed upon plan of action.
There is no substitute for open, honest communication when a breakdown occurs. You and your broker should communicate freely and clearly about what has happened. For example, if your broker had promised to have an educational resource for you by Wednesday, and it won’t be available until Friday, he or she should contact you as soon as they know the deadline will not be met. Remember – miscommunication is perhaps the most common form of breakdown.
Brokers and clients say some of the most common reasons for breakdown are:
Common reasons for from the Broker’s perspective:
Failure to define and know their goals and objectives.
Failure to communicate openly and honestly. A lack of full disclosure.
Freeloading or using a broker’s time and expertise thoughtlessly.
Blaming others and/or the broker for unsuccessful results.
Common reasons for breakdown from the Client’s perspective:
Sells the benefits of a relationship, then has others perform the work.
Recommends third party offerings in which the broker is compensated.
Fails to be creative and innovative in helping the client with their issues.
Driven by ‘NOW’ commissions vs. helping the client become successful.
YOU’RE RESPONSIBLE! Remember – Nobody cares as much about your money and plans as you. The key to any broker relationship is not so much the advice, but what you do with it.
Be sure you understand the broker’s advice and the reasons behind it.
Give your broker’s advice a fair trial.
Periodically review your broker relationship; is it working? Does it need improving?
Carefully choose the experts you need to help deal with complex problems.
Communicate openly and honestly and require the same of your broker.
If you call the signals with your broker, he or she can be a key asset and investment in helping you achieve your trading and investment goals. But remember:
And finally, there is nothing a broker can do which will overcome what the client will not do.
Until next time . . .