The investing process can be overwhelming even for experienced investors, much less those new to the field, and entering the stock market can be a chaotic and exhilarating decision. Therefore, it is essential not to let the excitement lead you to bad choices, and there are many less-than-stellar brokers on the market just waiting to take your money. Due to past performance, some particularly shady brokers have even been named and shamed by the industry.
Should you trust brokers who have been listed as such but profess to have changed their ways? This article will look at how some brokers receive negative reviews and whether or not they can redeem themselves and rebuild their reputations.
Why the bad press?
Before we can look at the feasibility of disgraced brokers regaining their reputations, we have to understand why they got into that position in the first place. One of the most common reasons behind this type of professional disdain is running or otherwise taking part in investment scams.
There are a few different types of scams that questionable brokers run. One of the most prevalent of them is “brokers” pretending to be experienced, well-educated, and regulated when they have little to none of the accomplishments they state on their resumes. This leads to investors entrusting them with their money only to see it lost, be it via sheer ineptitude or malicious intent. When this happens, and news of it reaches enough users, the broker is naturally blocked from the market.
Can brokers ever regain their reputation?
The investment market is large, with the United States alone boasting about 145 million stock-owners (56% of the adult population). With so many users, there is a constant stream of new users looking to invest. Some of them might be willing to take a chance on a formerly-disgraced broker, but doing so puts your money at risk.
It is extremely difficult for brokers to rebuild their reputation once it has taken a major hit. First, the details about their transgressions will always be known, and investors doing proper research will have little reason to trust that they have genuinely changed their ways. And once a broker has been proven dishonest, how can you ever trust what they say in the future?
Brokers to avoid
Before you start working with a broker, especially one within the foreign exchange market, take your time to research names and experience. Check for lists of brokers active in your specific section of the stock market. Some industry experts offer lists of forex brokers to avoid, for example, to help forex traders make smarter decisions. The same is true for other areas of trading, too. Set aside some time to investigate trusted industry names and which brokers they recommend before deciding where to spend your money.
Are you interested in wading into the stock market? You are in for quite the adventure, but make sure not to jump in headfirst! Ease your way into the market by doing plenty of research first. Keep our tips above in mind!