How to Check Out a Broker

    How To Check Out A Broker Splash image

    There are numerous Web sites you can visit to find information about a particular broker. However, they fall into two camps: Those that provide disciplinary information about a broker or firm, and those that provide customer evaluations of brokerage firms.

    Background Checks

    Background checks of individual brokers or brokerage firms should be made by using both the NASD BrokerCheck and by requesting information from your state securities regulator. The National Association of Securities Dealers (NASD) regulates brokerage firms and their employees. State disclosure programs may provide additional information on brokers licensed by the state.

    National Association of Securities Dealers (NASD)
    Under Top Links on the left-hand side of the NASD home page, click on the NASD BrokerCheck button.

    NASD BrokerCheck provides information on NASD- registered firms and their brokers that is required to be reported on the approved industry registration and licensing forms. It also includes disciplinary and disclosure information reported by regulators. Information that has not been reported, or that is not required to be reported or is no longer reportable on regulatory forms is not disclosed.

    North American Securities Administrators Association (NASAA)
    The NASAA is an association of 50 state securities agencies responsible for investor protection. Click on the Contact Your Regulator Link on the home page to obtain the address, telephone and Web site of your state regulator. Your state securities regulator can tell you if the broker is properly licensed within your state, can access the central brokerage registration database, and may be able to supply you with additional regulatory action taken under state securities laws.

    Broker Ratings

    Our own on-line survey asks members to rate their brokers based on: trade price and speed, reliability and overall satisfaction. To view the ratings, go to the Member Surveys area and scroll down to the Discount Broker Survey.

    Gómez helps businesses measure and improve their on-line offerings. In the process, Gómez created the Gómez Performance Indices (GPI) to define the elements of quality in the delivery of Internet-based services, measured by how long it takes to navigate a Web site and how frequently that process is impeded by errors.

    At, click on the Performance Strategies tab and select Benchmarking. From the pull-down Benchmarks menu, select US Brokerage GPI. The Broker GPI Benchmark presents the top eight firms rated by response time and success (lack of errors) rate.

    J.D. Power and Associates
    You can choose between two Customer Satisfaction surveys conducted in July of 2004, one covering 13 on-line brokerage firms and the other covering full-service brokerage firms. Customers were asked to rate the firms on a variety of issues including cost, customer service, trade execution, information resources, Web site capability (for the on-line broker survey) and account management and the representative/advisor (for the full-service broker survey).

    At the home page click on the Consumer Site, then the Finance/Insurance section.
    Keynote helps businesses measure and improve their on-line offerings. In the process, Keynote created the Keynote Broker Web Transaction Performance Index, which shows the average response times and success rates for 10 major brokerage Web sites.

    At the home page, in the right-hand column look under Web Watch, and under the Performance Indices select Broker Trading.
    The Kiplinger broker survey compares 11 large brokerage firms. Ratings are based on a variety of elements including commissions and fees, broker responsiveness and knowledge, mutual fund programs, and Web site ease and usefulness.

    In the left-hand column at the opening page, click on Tools and under Top Tools click on the Who’s the Best Online Broker? link.