Have you ever been faced with a decision either to change or retain a stockbroking firm, stockbroker or relationship officer that is performing below expectation? Often, as budding investors we face this challenge and choose to endure the unpalatable since it is often wrongly perceived that it is pretty difficult to change a stockbroker. First, it is good to ensure that proper investigation is done before deciding to change a stockbroker such that those shortcomings observed in the current stockbroking firm are not also prevalent in the new company chosen. Often, clients are quick to choose a “big” investment bank as their broker without taking a critical appraisal of the strength, weaknesses and (in) abilities of their prospective client relationship officer(s). Information technology infrastructure, staff turnover*, timely mandate execution, client feed back system, management quality, email and telephone ethics, research/financial advisory/web content are few criterion you may want to review before changing or choosing a stockbroker. You would also find related discussions on the StockMarketNigeria Forums thread – Choosing a Stockbroker – very useful.

Having decided on your target/newly chosen stockbroking firm, below are two strategies you could deploy to change your non-performing broker with ease:

Unified Clearing House Number (CHN) Strategy
This option is best for savvy investors or an experienced portfolio/fund manager. It is relatively easier and less costly to implement. It simply entails the opening of another stockbroking account in the target company (howbeit with the same CHN number with the previous account) and simultaneously maintaining the two accounts for the same portfolio. Only sell mandates are executed on the old brokers account while new buy mandates are executed in the target house. With time, when the account at the old stockbroking firm could be empty or close to being empty and the investor can then concentrate on the new stockbroking firm’s account. A unified CHN number of these accounts would allow the investor have access to the accounts on a single page on CSCS Online Access for effective management at a reduced cost.

Outright Inter Member Transfer
Simply click here to download the CSCS inter member transfer form . Fill out the appropriate sections and attach your current CSCS statement of account from your resident stockbroking firm. Ensure you do not carry out any transaction on the account until the transfer is completed. There are sections for authentication of the transfer by the Managing Directors of both the resident and the target house. The resident MDs seldom use this opportunity to conduct exit interviews with clients and thus constituting bottle necks to easy transfer. They tend to promise better service and assure the client to abort the transfer. To avoid this bureaucracy an investor could do a letter of authority to the target stockbroking firm mandating them to present the transfer documents at the resident house if the target stockbroking firm offer such share support services.

*Do kindly note that there are no openly available conventional methods for determining staff turnover; investors are advised to liaise with other investors already dealing with a prospective stockbroker for hint on this. It would also be good to develop a good rapport with ones account officer for timely mandate execution and frequent email communications.

This entry was posted on Monday, May 25th, 2009 at 6:16 pm and is filed under Nigerian stock brokers, StockMarketNigeria. You can follow any responses to this entry through the RSS 2.0 feed. Tags: Ogunyemi Olumade
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