The ideal kind of broker is one who is diligent, who goes out of his way to contact you about any update that you need to know. They give you what is due you without asking for anything more than what is rightfully due them. They do not have any right in siphoning off your money, much less use your account without your consent. In fact, they have no right to use your account, period.
I've had the experience to see this happen before and it's still happening to this day. I found out from a new acquaintance that her new broker is pulling the wool over her eyes. When he was already caught red handed, he was giving a lot of reasons yet no remorse was detected from him. So what is a client to do? The first step, complain with his boss. Unfortunately, the boss may not be interested in helping out. What's the next step? Talk to the organization with jurisdiction over the brokerage; that's the stock exchange itself (i.e., PSE). What if this isn't enough? The worst case scenario would be to bring the complaint to SEC. Of course, we're presuming that the client is being advised legally by her private counsel.
As of this writing, we heard that the said agent has been missing since 2 days ago. Worse, my acquaintance still has not received her money and the brokerage doesn't seem to be lifting a finger to help solve the problem.
How does this problem come about? This happens when the said agent, has already tasted the good life and needs to sustain it but has no regular means of doing so. So they decide to touch what is deemed untouchable: their client's money. The really creative agents have a lot of ways and means to be able to touch their client's money without even the client knowing about it. There's a promising career change in either magic or bomb disposal.
Before this turns into some long-winded sermon, I better get to my point. To the clients, this I say to you.
- Get a broker you trust. Whether they're your close friend, or relative, it doesn't matter but it should help. Remember, the keyword here is TRUST.
- It would help if the brokerage they're connected with is reputable. Why would you even want to play russian roulette in choosing the brokerage?
- The broker must keep you updated on all your holdings. They should be able to contact you through the celphone, landline, or even online (i.e., YM, Skype, etc.). They have to remember that aside from the price, YOU ARE KING (or queen)! Without you, there's no business to be made.
- Don't take everything that the broker tells you hook, line & sinker. Many brokers tell you what you want to hear. Ask yourself this, does your broker tell you what you need to know?
- Follow what your client tells you to the letter. The customer is king, up to a point. They're your meal ticket. Without them, you have no lifeblood.
- Never destroy the trust given to you. Trust is one of the hardest things to give to someone. Don't take it for granted.
- Live a simple lifestyle. You may hear some other brokers always partying in bars, and all that fun stuff. Why do you want to join their rat race? Once you start living a lifestyle that you can't afford but you already decide you can't have without, your days are numbered. Start counting the days that go by. At least you'll know how long it took for you to achieve your downfall.
- Don't create a mutual fund of your own using your clients' money. YOU DON'T HAVE THE LICENSE TO DO THIS! (see #2)
- You may get the respect and recognition many people give to brokers when they're in parties. They're like doctors, people always want to get a tip from an "expert". DON'T LET ALL OF THIS GET TO YOUR HEAD! You have a responsibility to be diligent to your clients' accounts.
- Just because you're on a winning streak doesn't mean you're Superman. The last thing you want is to let success get to you that you become vulnerable on other things that are more important like observing where to cut your losses. Once you believe that you're invincible, you're f**ked.
We don't need agents that double cross us. It's already hard enough for the PSE to build the renewed interest in the market. Agents like the ones I mentioned destroy the credibility of the industry and scare off potential players.
Here's hoping that these people get caught and persecuted.