End-of-the-sales-month push. We've warned you about end-of-the-month pitches by car salesmen ... beware the same from brokers. Some unscrupulous brokers will "churn and burn" their accounts toward the end of the month (especially "discretionary" accounts where a client has authorized the broker to buy and sell at his discretion ... one reason we don't ever want you to grant discretionary power to your broker!)

Every month many major firms total a broker's commission for the previous 12 months to determine a broker's "payout" (his share of the commissions) for the following month. Low level of commissions -- low payout. If you see a pattern of "end of the month" recommendations from your broker, it may be time to switch brokers.

Margin trading. Your broker suggests you buy stocks on margin, i.e., by borrowing up to 50% of the purchase price. You can buy twice as many securities as you have money available for because your kindly brokerage firm lends you the money and charges you interest. This is a major profit center for most brokerage firms and a very risky way to invest ... DON'T DO IT!

"Bonus" investments -- as in "bonus" annuities that promise an above-average interest rate. Sounds good? Not so fast. As usual, there's a hitch. Check the fine print and you'll probably find that the initial rate is much lower with an additional "bonus" rate for the first year only.

Your broker is changing firms. Why? Is it because the resources of the new firm will help him better service your account or is it because he's receiving a large, up-front cash bonus for bringing his "book" of accounts (including you.) Be especially wary of the hard sell during those initial months after his move. Firms often offer brokers a "recruiting" package that includes a higher payout on trades made in the first three to six months with the new firm. (Do you feel a twinge of distrust here?)

Sales contests. Ask your broker flat out, "Are you trying to qualify for a sales contest prize?" If the answer is yes, make him prove to you in writing that the investment matches your objectives. (If he lies, you can hold it against him later if necessary.)

Well, I guess by now we've guaranteed ourselves a lashing next time we're on the floor of the New York Stock Exchange ... just kidding. Those brokers/financial planners who are truly committed to helping you - and there are many of them out there - won't mind that we shared this information with you. Honest brokers want you to be an informed customer.

You can avoid sneaky broker tactics by clicking here to learn how to Hand-Pick a Top-of-the-Line Broker.

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