If you think you need a new stockbroker, then read this.

One of the most important decisions successful investors make is finding a good stockbroker, it is a decision all investors who invest or wish to invest in the stock market must make. No matter how knowledgeable you are about investing you need a stockbroker to help you trade.

A stockbroker is a licensed professional who buys and sells securities for you and trades at the stock exchange on your behalf at a prescribed fee. Although it is important to have a stockbroker, that is not all it takes to be successful at investing, you must also know when to take a bow. Some investors have lost money because they failed to change their stockbroker when it became necessary. Knowing when to quit a stockbroker is also a test on your ability to make good judgment on your finances.

On your investment goals
Before picking a stockbroker have your investment objective in place. This will aid your choice of a stockbroker and help you know when you broker is helping you meet those objectives. Discuss these objectives with your stockbroker and ensure they are committed to helping you achieve them.

Why you need a stockbroker
Stock brokers do research and have access to a wide range of information about the capital and money markets. They can help you identify which investments meet your objectives. Most investors do not have the time for such tasks but with a stock broker, it's a piece of cake. Using a stockbroker will help you become a better investor, especially if your stockbroker takes up the responsibility to help you learn.

Stockbrokers teach you about the stock market and help you understand terminologies that may be otherwise confusing.  Your stockbroker can help you manage your portfolio and minimize your risks. Your stock portfolio shows you the number of stocks you have, the history of past trades and also reveals whether you are making profit or losses. Stockbrokers have a great deal of experience in this business, even more education, and often times excellent gut instincts about what is coming next in a given stock.

But this doesn't mean that stockbrokers' services or advice is infallible. Everyone makes mistakes but, by following the advice of a stock broker you are much likely to make fewer mistakes than if you were going it alone. Besides, you can learn from past mistakes the brokers have made and avoid future mistakes of your own by taking their advice and guidance to heart.

However, there are occasions when you need to take decisive steps to save your portfolio and your investment such as changing your stockbroker.

Keeping in touch
Once you have signed to operate an account with a particular stockbroker, it is necessary to know the terms of the contract, and maintain a relationship with them. You can do this through phone calls, text messages, emails and visits when necessary. How regular you do this depends on how often you want to keep in touch and your activities concerning your portfolio. Along the line you want to be sure that you are dealing with an ethical stockbroker, one that is thorough in their dealings. While you try to maintain your relationship with your stockbroker, your broker also has some obligations towards you.

First, they should furnish you with your account details regularly. It could be monthly, quarterly, or twice in a year or by any other arrangement you prefer. Whatever method you choose should be regular.

Also, whenever any action is taken on your behalf concerning your account, such as a buy or sell, you should be notified. Security and Stock Exchange commission (SEC) has made it easier by introducing trade alert. With trade alert you are immediately notified about any transaction on your account. Sadly, not many investors use this.

When not to quit your stockbroker
You do not need to quit your stockbroker when mistakes happen once in a while; there is only a problem when these mistakes become regular. It is your money at stake and whoever you give your money to should be accountable and transparent enough to eliminate suspicion about what they do with your money and doubt that they can handle your money well and deliver desired results.

Also you do not need to quit your stockbroker because you are cash-strapped. Sometimes clients who are in dire need of money and can't get it elsewhere feel it is best at that time to close all investments in stocks and opt out. Mrs.

Dorothy Ken-Magbo Head, business development for Shelong Investments suggests that a good stockbroker should not allow a client end their relationship based on financial crisis. She says “you should find a way to help them raise the money while at the same time ensure that they still have their accounts with you.” For example if a client has ten thousand units of 5 or more stocks and wants to sell all to raise cash, she adds “I may sell about nine thousand units or more of each stock each and leave the rest. Whatever is left has potential to grow and still yield dividend and even bonuses.”

If there are investigations going on concerning your stockbrokers' activities, please wait until the allegations have been confirmed, do not jump to conclusion.

You may want to quit if…
  Your mandates are not carried out on time- if your stockbroker consistently flouts your buy or sell order you need to decide if you want to continue with the same stockbroker or not. Delay in carrying out your instruction on your portfolio can make you lose money. Sometimes, stockbrokers delay the purchase order of smaller clients and pay attention to bigger clients or even their in-house investments. If your stockbroker considers you too small to do business with them, move.
  You keep incurring losses- if instead of making profit on your investments you keep incurring losses on most stocks in your portfolio there might be a problem.
   Selling your shares without your consent- this might happen by mistake when there is a cross deal, but when it becomes a habit you may be in the wrong place.
 When explanations do not suffice- Lawrence submitted his certificates for verification and returned three weeks later only to be told to come back in two weeks.  When he went back, he found out that his certificates were still on the same table he left them five weeks ago. No explanation was given for this shabby treatment.  If your stock broker always gives flimsy excuses or no reasons at all for services not rendered or for poor delivery, do a rethink.  
   When you broker is involved in fraudulent activities- If after investigations the security exchange commission (SEC), Economic and Financial crimes commission (EFCC) or the Nigerian stock exchange(NSE) confirm that your stock broker has been involved in fraudulent activities or the directors compromised with issues of integrity and loyalty to customers, change that stockbroker.

When your stockbroker advises you to quit. Sometimes stockbrokers ask their clients to move their account to other stockbrokers when they feel they can no longer serve such customers. They also ask a customer to move if he is troublesome, not transparent or insincere. Whatever may be the reason, once your stockbroker or financial adviser feel you need to move please do.
   When they overcharge you- all buy or sell orders are charged commission but sometimes these commissions exceed what stockbrokers claim. When you get your account statement, ensure that you are charged accurately the agreed fees, if you are constantly overcharged, reconsider you choice of a stockbroker.
 When you need to consolidate your account- sometimes out of ignorance, some investors may have opened several accounts with different stockbrokers. At some point they will need to cut down on the number of stockbrokers to just one or two. At this time they will have to quit some.  
   Poor customer relations-if your broker pays little or no attention to your complaints or treats you shabbily.
   When your stockbroker is not transparent -when you are not confident that your account is actually active with your stockbroker because of the absence of an account statement, inaccessibility to your account and so on, move to a more transparent stockbroker and or financial adviser.

Changing your stockbroker
If you have made up your mind to quit your stockbroker, then you need to begin a search for another one. The steps are not different from what we recommended in issue 3 (How to get the right broker), but this time you will need to exercise more caution to be sure that your next stockbroker will not be the same with the first. But just before you go;
 
  Talk with your account executive: tell your account executive about your intention to move your account to another stockbroker and state your reasons. This is not to hurt them but to help them grow. Perhaps after they might have lost you then they can re-evaluate their weaknesses.
   Ask for your account statement
   Ask for an Inter-Member Transfer form duly executed by the Shareholder, the resident stock broking firm (your current stockbroker) and the target stock broking firm (your prospective stock broking firm)
  Letter of Transfer of Shares addressed to the Director-General of the Nigeria Stock Exchange
   Copy of CSCS Statement containing shares sought to be transferred.

Should your stockbroker refuse?
Some brokers might try to persuade you to stay while some just won't let go and may employ various tactics such as delaying your request and trying to make the whole process very complicated. If your stockbroker refuses to let you go against your wish, you have the right to report to NSE and SEC.

It might interest you to know that...
Stockbrokers are not always to blame for some of the errors that occur in transactions, third party members such as registrars sometimes play a role in the conflict between stockbrokers and their clients. When registrars do not credit the account of investors especially during pubic offers, some clients end up accusing their stockbrokers for not adding such stocks to their account, when in real sense the shares have not even been allocated to them. Such cases are often escalated when the client needs to trade on their stocks and their broker says they cannot find them in their account.

If you buy public offers follow it up till your shares are either allocated or your money returned.

Ensure you know your new stock broker reasonably well and that they can be trusted to deliver. Before you sign on a new agreement find out their terms, charges and commission.

Changing your stockbroker is a not magic wand for making huge returns on your investment, rather it helps ensure that your investment is safe but if your new stockbroker has deeper insight into the market and sharper investment skills than your former, you may make more money.