Originally created 07/06/97

Confidence in broker important



Q: In late May, my stockbroker suggested I sell my 1,200 shares of Marsh & McLennan's stock. He failed to mention that a week earlier the company announced a two-for-one stock split. It probably would have made a difference in my decision.

Should I seek a new broker?

A: Perhaps. But don't rush to judgment.

Your broker may have had a perfectly good reason for suggesting that you unload your stock.

Typically, stockbrokers get their investment ideas from their firm's research department. The stock analyst covering Marsh & McLennan may have issued a sell recommendation.

Still, you are right to be upset if your broker didn't pass along information as pertinent as a stock split.

Your broker should have explained that to you, particularly if he initiated the call, one official said.

"If you are recommending a sale of a stock, you have a higher degree of responsibility of knowing all of the factors," said Marilyn Davis, district director of the National Association of Securities Dealers in Atlanta. The NASD regulates registered stockbrokers.

But before making a decision about whether to can your broker, you should have a frank talk with him.

Ms. Davis said if she were in your shoes, she would want to know why the broker suggested a sell recommendation and whether he knew about the stock split announcement.

In the end, if you've lost confidence in your broker, you probably should do yourself and your broker a favor and find someone else to handle your investments, Ms. Davis said.

Q: How can I get stock from my late husband's estate transferred to my name? My stockbroker said I need a federal tax employee identification number, or EIN. I got the number and was told I needed another form. When I called the Internal Revenue Service about it, I was told I didn't need the EIN. But the broker still says I need the number. Help!!!

A: What's with these stockbrokers?

You would only need a tax employee identification number if the value of your husband's estate is over $600,000. Anything below that threshold can be passed along tax-free.

So, assuming that we're talking about an estate below $600,000, what you probably will need to do is have your husband's estate probated in state court, said Rebecca Berg, an attorney who specializes in issues affecting the elderly.

Probate is the legal process of making sure the will is legitimate.

"Somebody has to have authority to transfer the stock," Ms. Berg said. "The transfer agent won't do it until they get a court order."

If the stock certificates had been owned jointly by your husband and you, ownership would have automatically transferred to you at the time of his death.

But property that is not jointly owned typically passes to heirs by a will or through a trust.

Unlike a will, a trust bypasses the probate process. Stocks and other property would be held by the trust.

You probably should contact an attorney to help you sort out ownership of the stock.

John Finotti is a business writer for The Florida Times-Union in Jacksonville. Send questions about money matters to him in care of Business News, The Augusta Chronicle, P.O. Box 1928, Augusta, GA 30903. He can be reached on the Internet at tubiz@tu.infi.net.