Broker financial services is a term that encompasses a variety of services, typically to the individual investor, that take a client’s entire financial plan into account. The exact services vary between firms, but most provide some or all of certain basic functions. Portafina Information
One of the first things the broker will do is sit down with the client and determine the client’s goals and expectations. Naturally, buying and selling stocks and bonds is one of the broker financial services offered, but the broker will also analyze the client’s willingness and ability to take risks. For those with little risk tolerance, such as those near retirement age who have a comfortable nest egg established, he will recommend funds that minimize risk. Others who have the need to be more aggressive in their investment strategies may be directed to higher risk opportunities, such as hedge funds.
The analysis of the client’s insurance needs is also typically included with broker financial services. Life insurance, long term care, or umbrella policies may all be evaluated or recommended. The sales of the policies are sometimes handled by the firm, but may also be acquired elsewhere.
Broker financial services usually include directing the investments in a 401(k) or SEP to help maximize the return. They can also assist with 401(k) rollovers or evaluation of a self-directed plan.
Home ownership and/or equity evaluation may also be offered as broker financial services. Topics such as the timing of sales (for purposes of capital gains taxes) or reverse home mortgages are often included in the package of broker financial services offered.
Retirement planning is one of the main functions of broker financial services. The broker will meet with the client to determine how much will be needed for a comfortable retirement. By factoring in such things as inflation, current salary and savings, expected income from Social Security, among others, the broker can advise how much the client needs to save or invest and the rate of return needed to achieve the stated goal.
Inheritance planning may also be one of the broker financial services offered by some firms. The broker can advise on the benefits and disadvantages of trusts, “gifting” the inheritance during life, and other strategies that can impact the taxes for their heirs.
Few online firms can offer complete broker financial services. Most often, it is necessary to find a firm locally so that clients can meet face to face with the broker for a lengthy initial consultation and then periodic follow ups.
When planning to allow one firm to handle all broker financial services, it is important for potential clients to investigate the firm’s credentials and record. For example, if the firm sells insurance, they should be properly licensed and registered. Likewise, they should have the ability to trade directly on the market floor. It is also best if the broker is a licensed financial planner, with credentials in estate planning. Large, established firms with nationwide offices are typically safer, since small, independent brokers can go out of business for a variety of reasons, perhaps taking your investments along.