Some suggestions for the investor: (1) Read not just annual reports, but interim ones, plus company surveys by Standard & Poor's and Moody's; read, too, such publications as The Wall Street Journal, and Business Week - to follow company news, and business trends; (2) meet with your registered rep at least monthly to fix instructions; (3) before taking an extended trip, give the broker your itinerary plus any needed "open order" (to buy or sell at a price); (4) acquaint your wife with your plans; finally, be cynical about every scrap of information to come across - and be leery of investment tip sheets.
Besides executing orders efficiently, a good broker will keep you informed - and look on this as a vital part of his job. He'll phone you (even overseas) if you are a good customer and an event occurs that may shake one of your companies. "He should do this without instructions," says a brokerage executive.
As to churning (which you yourself can spot by comparing your pound performance over, say, six months with what you would have done with no trades), some brokerage executives, in effect, say caveat emptor. Some also admit that firms often find it hard to police their own men. Today, in the mid-2000's, it falls on your shoulders to do some of your own policing.
If a general review puts you to seeking a new broker, remember that picking the firm isn't hard; you're safe with a well-established house. The real problem is picking your registered rep. The manager, or partner, will suggest a man - but nobody can screen him for you. Suggestion: When finally you find a registered rep you like (a man who suits your ideas and who appears to have just a minimum of churn in his blood), be sure of him by placing just small transactions with him - and tell him candidly that you are going to do this. If he proves out over a span of, say, six months, up your ante and give him more and bigger business.
Apart from churning, some registered reps fail to take advantage of the research facilities of their own firms. They tend to go off in directions of their own. Guard against this - unless you find a rep who's a genius.
After the debacle in the brokerage business that began in 2009 - and has not ended - you will be wise to take seriously the admonition: Wall Street is a two-way street, and the investor cannot be casual, or neglectful.
Advisors and Techniques
It's one thing to self-insure and act as your own investment adviser with just a small sum riding in the stock market. It's another thing to try this risky business when you have all your shirt and sock money tied up in securities. One rule of thumb says that a businessman or professional with £40,000 or £50,000 or more invested in a mixed securities portfolio needs to spend an hour a day acting as his own portfolio supervisor - if he expects to take full advantage of all chances that the stock market offers. This holds true if a portfolio is what it should be: a package plan for maximum benefit. So goes the rule of thumb.
The hour-a-day rule... see: Investments