LAP: QS-048LAP: QS-048

Considerations in Selecting a Securities Sales AgentConsiderations in Selecting a Securities Sales Agent

ObjectivesObjectives

Describe securities sales agents.

Discuss considerations in selecting a securities sales agent.

Describe securities sales agents.

Objective

• “Middlemen”• “Middlemen”• Your link to the stock exchange• Your link to the stock exchange• Brokerage houses

• Banks

• Work for:• Work for:

• Must be licensed• Must be licensed

• Salespeople• Salespeople

• Accounting firms

• Insurance agencies

• And more!

• Traditional

• Provide research and guidance

• Offer other financial services

• High commissions

• Full-service• Full-service

• Offer basic trading services

• No research or guidance

• Less expensive

• Do not solicit business

• Discount• Discount

• Ideal for self-directed investors

• 24-hour access

• Blurs line between full-service and discount

• Usually the cheapest

• Online• Online

Discuss considerations in selecting a securities

sales agent.

Objective

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!Shop around!Factors to consider:Factors to consider:

Proper licensing

Steady work history

Proper licensing

Steady work history

PricePrice

Education and experienceEducation and experience

Shoparound!

Shoparound!

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: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 customersSatisfied customers

Comfort levelComfort level

Running a Running a backback ground checkground 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 StatesUnited States

CanadaCanada

Give the benefit of the doubtGive the benefit of the doubt

Running a Running a backback ground checkground check

Canadian Securities Administrators

System for Electronic Document Analysis and Retrieval

Canadian Securities Administrators

System for Electronic Document Analysis and Retrieval

• 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 Commission

$$$$$$

Broker makes money with each transaction. 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%

• Broker is paid a certain percentage of the value of money s/he controls for you.

• Usually about 1.5%

Asset-management fee 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

• 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

Quick CaseQuick Case

She’s shopping for a broker.She’s shopping for a broker.

Campbell’s ChoiceCampbell’s Choice

What type of broker would be best?What type of broker would be best?

What factors does she need to consider?What factors does she need to consider?

What precautions does she need to take?What precautions does she need to take?

MarkED

Acknowledgments

Original DevelopersSarah Bartlett Borich and

Lelia Ventling, MarkED

Version 1.0

Copyright © 2007MarkED Resource Center

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