09 Dec Should we transfer this stock to our broker?

Q. What are the advantages and disadvantages of transferring bank stock held jointly to our broker, also in a joint account? The broker would manage the account, but also when we decide to sell, he would be responsible for figuring out the tax implications. We purchased shares years ago at an IPO. We have also inherited shares from my dad, which are now part of the account. In addition there has been at least one merger. Figuring all this out would be difficult.
— Investors

A. You’re talking about a broker.

You may want to consider working with a different kind of financial advisor because your question involves taxes, concentration of a position, estate planning and then the management of the investment itself.

An advisor, especially one whose services include comprehensive planning, can help you navigate all these areas, said Deva Panambur, a fee-only planner with Sarsi, LLC in West New York.

“Comprehensive financial advisors provide investment planning, tax planning, retirement planning and a host of other services which will help you reach your goals,” he said. “A good advisor will help manage your bank stock holding in relation to your total situation.”

Panambur said an independent advisor who does not sell any proprietary products may be a good choice for you.

As you proceed, it’s important for you to understand how the advisor is compensated and who pays the fees.

“Independent advisors are often fee-only, with no commissions, and only their clients pay them fees, so their interests are aligned with yours and they are incentivized to act in your best interests,” Panambur said.

You should ensure that the advisor manages your assets in an account that is opened for you with a third-party custodian, such as Charles Schwab, Panambur said.

“The account should be in your name and operated by you. You can login to your account anytime and the custodian sends a statement to you periodically,” he said. “The advisor only gets the ability to buy and sell investments in the account and gets paid the fee through the custodian.”

As you look around, you should check the advisor’s credentials to ensure that they have the required expertise. Some common credentials are certified financial planner (CFP) and Chartered Financial Analyst (CFA).

These credentials are earned by passing rigorous exams and by satisfying adequate work experience and education, he said.

You can confirm these credentials on the websites of the organizations that offer them: cfp.net and cfainstitute.org.

Panambur said you should also consider how the advisor works with you, how approachable they are and their philosophy towards investment planning for someone like you. You should feel comfortable with their answers, he said.

Panambur said there are several sources of information to help you in your due diligence.

Every advisor and their company are required to be registered and publicly disclose details about their business by filing a Form ADV. You can review the form at https://advisorinfo.sec.gov/. Other sources of information are the advisor’s website and organizations the advisor may belong to such as Financial Planning Association and The National Association of Personal Financial Advisors.

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This story was originally published in December 2024.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.