THE GOODS : Securities Guard : Finding the right broker can be risky business. But asking a few question can help make your choice a sound investment

You’ve often thought it would be a good idea to invest in stocks and you’ve saved some money. But you’re a little nervous. You want the advice of a broker, but you don’t know much about them. Here are some tips from experts on how to choose one.

Start by asking yourself some questions. What are your financial goals? How much money do you have to invest? How long can you afford to tie it up?

One of the most important things to decide before consulting a broker is how much risk you are willing to take. Think of it this way: What percent of your money can you afford to lose if an investment sours? Then consider your temperament. If you invest in stocks, will your blood pressure rise every time the stock market dips?

When you do go to meet a broker, be prepared to discuss your objectives. Show the broker that you intend to control the relationship. After all, it’s your financial future at stake.

Shop around for a broker. Even if a friend or relative has a broker they swear by, you should interview several before making a selection. Look for a broker who is compatible with your personality and risk tolerance. If a broker doesn’t answer your questions directly or intimidates you with lots of industry jargon, find someone else.

Find out about a broker’s educational and professional background. Brokers are not necessarily knowledgeable about financial planning. So, for example, if you want a broker who can discuss retirement planning as well as pick stocks, then you should try to find one who has taken additional courses in that area.

Don’t assume all brokers are experts in the stock market. The level of training can vary considerably from broker to broker and from firm to firm. At some penny stock firms--firms that specialize in low-priced, highly speculative securities--brokers learn about the job by watching more experienced brokers pitch stocks to customers over the phone.

Look for a broker who has a track record. “A new crop of brokers is constantly being trained, but I would not want to work with someone who hasn’t been through an up-and-down market,” says Barbara Roper, director of investor protection at the Consumer Federation of America.

Find out how many clients a broker has. If you’re a small investor, you may not get much attention from a well-established broker who has 100 or more clients.

Ask if you need to have a minimum amount to open a brokerage account. And ask if a broker expects you to invest a certain amount of money before he or she will take you on as a client.

Mary Calhoun, a securities arbitration consultant in Watertown, Mass., says many experienced brokers prefer to do business only with clients who have $100,000 or more to invest. If you’ve been referred by another client or colleague they may take you on anyway, but you aren’t likely to be a top priority.

Ask prospective brokers about their investment philosophy. If the idea of losing money on investments keeps you awake at night, you’ll probably want to avoid an aggressive broker who is eager to put your money into a portfolio of go-go stocks the firm is promoting.

Check to see if a broker specializes in a particular product. And ask if there is a certain type of client the broker prefers to work with. If that doesn’t describe you, there could be clashes on investment style and choices.

Make sure you are talking to a broker who can take care of all your needs. Ask if the broker is licensed to sell a full range of investments--from mutual funds and individual stocks, to municipal bonds, treasury bonds and annuities.

Don’t take a broker’s word for it; check with state regulators to see if the broker is licensed. Anyone who sells securities must be a registered representative. Even financial planners who don’t buy and sell securities must be registered as an investment adviser.

When you write to the state securities agency, also ask for a copy of the broker’s disciplinary history. This will tell you if the broker has been fined or censured for violating securities laws or industry rules.

If you find a minor infraction, you probably don’t have to worry. But if you see that there have been numerous complaints against a broker who frequently switches firms, you should be wary. “Even if all the complaints have been resolved, it’s something you might want to ask about,” says Alice McInerney, who heads the New York Attorney General’s Investor Protection Bureau.

Ask for references. “Always ask a potential broker for the names of three satisfied customers,” Calhoun says. “If they say they can’t give out the names of satisfied customers, they don’t have any.”

Be sure you understand how brokers are compensated. Although transactions vary, remember that brokers are paid for selling investments, not for giving good advice. They are usually under pressure to meet monthly sales quotas.

“It’s important to keep in mind at all times that a broker is a salesperson,” Roper says. “They have no legal responsibility to give you the best advice.”

That doesn’t mean you can’t get good advice from brokers. It just means that you need to carefully scrutinize their recommendations because they have a financial stake in the investments they sell. For instance, brokers frequently get higher commissions or bonuses for selling the firm’s proprietary products or a particular stock that the firm has underwritten. And, as a rule, the riskier the investment, the higher the commission.

Ask about account fees. In addition to commissions on individual transactions, you may have to pay an annual fee to maintain a brokerage account. Find out about all the fees and charges you will have to pay to do business with the broker. Get the information in writing.

Read the new account agreement carefully. As a rule, you should not give the broker authority to make investment decisions without consulting you.