Before investing in stock or other securities, you may decide to seek the help of an investment professional. Selecting this investment professional is an important decision. This Investor Bulletin provides you with questions you should ask before hiring any investment professional.
Experience and Background
- What experience do you have, especially with people like me? What percentage of your time would you estimate that you spend on people with situations and goals that are similar to mine?
- What education have you had that relates to your work?
- What professional licenses do you hold?
- Are you registered with the SEC, a state securities regulator, or FINRA?
- How long have you done this type of work?
- Have you ever been disciplined by a regulator? If yes, what was the problem and how was it resolved?
- Have you ever had any legal action (e.g., lawsuits or criminal charges) brought against you? If yes, please describe the legal action and how it was resolved?
- Have you had customer complaints? If yes, how many, what were they about, and how were they resolved?
- What type of products do you offer?
- How many different products do you offer?
- Do you offer “house” products? If so, what types of products are they, and do you receive any incentives or benefits for selling these products, or for maintaining them in a customer’s account? What kind of incentives or benefits are they? How could this affect me?
Payments and Fees
- How do you get paid?
- How does your firm get paid?
- Given my situation and what I’m looking for, what is the [best / most cost effective] way for me to pay for financial services? Why?
- What are the fees that I will pay for products and services?
- How and when will I see the fees I pay?
- Which of those fees will I pay directly (such as a commission on a stock trade) and which are taken directly from the products I own (such as some mutual fund expenses)?
- If I invested $1000 with you today, approximately how much would you get paid during the following year, based on my investment?
- Does someone else (such as a fund company) pay you or your firm for offering or selling these products or services? Do you receive any other incentives or benefits for selling these products? If so, what are they and how do they affect me?
Expectations of the Relationship
- How often should I expect to hear from you?
- How often will you review or monitor my account? Are there any limitations to this type of service with my account?
- How often will you make recommendations to me?
- If my investments are not doing well, will you call me and recommend something else?
- If I invest with you, how can I keep track of how well my investments are doing?
Investor Bulletin: How to Select an Investment Professional
Investor Bulletin: Making Sense of Financial Professional Titles
Investor Bulletin: How to Check Out Your Investment Professional
Investor Bulletin: How Fees and Expense Affect Your Investment Portfolio
The Office of Investor Education and Advocacy has provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities or tax law.