The best way to pick a broker or a financial advisor is to use one that is referred to you by friends or family. They generally have gone through the test of time, and if your family trusts them there is a good chance you will too. But even that is not a foolproof way to make sure you are getting a trustworthy advisor. Just look at the case of Bernie Madoff; many of his clients were referred because he was promising great returns. When it comes to choosing a new broker or changing to a different broker, there are many things to look out for.
Most people will go with a broker that has the backing of a large firm. The larger firm means there is often more regulatory oversight, and care is taken to hire only the best. But that does not mean you still will not fall into the hands of a bad egg. Just look at the case of LPL Financial. Over the past several years this company has seen explosive growth. They are expanding to remote areas and tapping markets that have yet to be untapped. They are very large, very successful, and they are also regulated by the authorities more than any other company. In this case, they have become so big that the LPL home offices cannot manage brokers in the field.
Many people who had been with LPL were victims of fraud. They wish they could have seen the signs of when it was time to change brokers. The best way to determine if your broker has your best interest in mind, or if he is just looking for a bigger commission, is to get a second opinion. Advisors are always vying for more business, and they often will do an analysis for free. Take your account statement to someone you trust, and compare the plans that they offer.
Before you just choose any broker, however, do a broker check. It is quick and easy to do with the online FINRA broker check website. You can check to see how long the broker has been in business, who he has worked for in the past, and if there have been any charges brought against him. Find out all the details, and armed with this knowledge ask some leading questions. Someone who is looking out for himself will try to twist the truth.
Your retirement is nothing to gamble with. Being the victim of fraud can mean the difference between enjoying your golden years and working your way through them. If you feel like something is not being disclosed, feel you are being cheated, if your account statements seem inaccurate, or something just does not feel right, take a step back and get a second opinion. You want to make sure your account is safe and secure, and that might mean changing brokers. If you feel there is nobody you can trust, you can do a self directed account. Many discount brokerages, such as Scottrade will offer them. Regardless, you should be checking up on your broker and your account every few years to make sure you are not being swindled.