Yesterday Lauren Young and Lou Carlozo wrote about six ways to predict a brokerage is about to crash. There are usually warning signs, they wrote, if one knows where to look.

1. Google alerts can track news about a firm.
2. Online research via FINRA’s BrokerCheck (brokercheck.finra.org) or the SEC (www.sec.gov, can yield a wealth of information, if you’re willing and able to dig.
3. Consult private services that look into brokerage firms.
4. Examine financial statements.
5. Find a resource, such as NYU’s Volatility Lab web site (vlab.stern.nyu.edu, to check a brokerage firm’s leverage.
6. Learn who a broker’s counterparties are, and with which firms they have other relationships.

That’s all well and good, but we were wondering what would you do to reassure yourself about the health of your broker. Use the comments to share your answers.

This entry was posted on Wednesday, November 9th, 2011 at 3:11 pm and is filed under Risk Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.