Choosing the person with whom to trust your money can be a difficult decision. There are many different options when it comes to investment professionals and great variation when it comes to credentials, experience, fee structure and other costs.
Even if a broker has been recommended by a trusted friend, it is still important to do a little research on the person to make sure they have the requisite credentials and experience to meet your investment needs. Additionally, it is important to check their work history and whether they have been the subject of any disciplinary action.
Several resources exist to help investors research and select knowledgeable and experienced professionals. FINRA, provides a few tools to aid investors in their search:
- You can check out the “Smart Investing” section on FINRA’s website for questions and considerations when selecting an investment professional.
o http://www.finra.org/Investors/SmartInvesting/
- Research candidates using “Broker Check” which will allow you to see the person’s work history, licenses, any disciplinary actions or customer complaints, and more.
o http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/
- Understand professional designations using FINRA’s database:
o http://apps.finra.org/DataDirectory/1/prodesignations.aspx
- Use one of their many Calculator tools to help determine what, where, and how much you should be investing.
o http://www.finra.org/Investors/ToolsCalculators/
The SEC also has several helpful tips for investors researching brokers and provides a list of introductory questions to ask potential brokers:
· What experience do you have, especially with people in my circumstances?
· Where did you go to school? What is your recent employment history?
· What licenses do you hold? Are you registered with the SEC, a state, or FINRA?
· Are the firm, the clearing firm, and any other related companies that will do business with me members of SIPC?
· What products and services do you offer?
· Can you recommend only a limited number of products or services to me? If so, why?
· How are you paid for your services? What is your usual hourly rate, flat fee, or commission?
· Have you ever been disciplined by any government regulator for unethical or improper conduct or been sued by a client who was not happy with the work you did?
· For registered investment advisers, will you send me a copy of both parts of your Form ADV?
FINRA’s website is directly accessible at www.FINRA.org.
SEC’s website can be found at www.SEC.gov.