The federal or state securities rules require brokers, investment advisers and their companies to be licensed or enrolled in their states. They are also needed to make essential information public. However, it is up to you to search for that information and make use of it in protecting your investments. The good news is that this data can be easily obtained from the Internet.
You should first ensure that your broker or investment advisers have not previously had any disciplinary issues with regulators or their other investor before you decide to invest or pay for investment advice. You should also find out from them if they have been registered or licensed by the governing body. It is vital to know this since recovering your money from unregistered securities brokerage companies who become bankrupt can be difficult even if the court rules in your favor.
By searching the Central Registration Depository (CRD) database, you will discover so much about most brokers and the specific companies where they work. You will also find more details about these financial brokers about where they worked before and their educational backgrounds. Since Central Registration Depository contains information about these brokers especially when it comes to customers claims; you can request them to give you detailed data about them.
After checking out the registration status and record of your financial firm, you should seek to know whether or not the financial firm is a member of the Securities Investor Protection Corporation (SIPC). SIPC gives clients protection if the financial companies become bankrupt. You will not be qualified for compensation by SIPC if you place your money or securities in the hands of a financial company that is not a SIPC member as soon as the company goes out of business.
As soon as you decide on a few prospective companies, it is crucial to ask them a few questions during your meeting with them. Some of the questions you can ask are:
o Clarify to me what experience you have in handling clients, especially in my case?
o Which university did you attend and what is your employment history?
o Which products and services do you provide and whether you can recommend any other products or services to me?
o What kind of payment method do you consent to for your services?
o Have you previously had a disciplinary action taken against by any government regulator for unprincipled conduct or have you ever been charged by a client who was not contented with the work you did?
As soon as they answer all these questions, you need to compare the different financial companies and decide on which company you can happily work with.
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