How Do I Spot Conflicts of Interest at a Broker?

Common conflict types

A broker profits when you trade, so they may subtly encourage overtrading through marketing or easy access. If they offer proprietary investments or insurance products, they earn commissions when you buy them. Market-making activities (the broker trades against you) create a direct conflict: your loss is their gain. Some brokers receive payments from third parties for sending them your orders.

Disclosure requirements

Regulated brokers must disclose material conflicts, though the depth varies by jurisdiction. Read any conflicts of interest policy they provide. Pay attention to what they own or advise you toward—if they recommend their own products heavily, that's a red flag. Ask whether they receive compensation beyond what you pay directly.

Practical checks

Research the broker's corporate structure: is it independent, owned by a bank, or part of a larger financial conglomerate? Conglomerates often steer customers toward in-house products. Compare their recommendations to independent research. If a broker heavily promotes one asset class or strategy, consider whether that benefits them more than you. Request in writing how they manage conflicts—evasive responses are telling.