What to Ask a Investment Professional
When choosing an investment professional, you should interview candidates to learn important information about them, like their experience, qualifications and fees. Here are some questions you should ask them—and some questions they may have for you.
Experience, Credentials, Qualifications
• What experience do you have working with people like me?
• What licenses do you currently hold? Are you registered with a state, the SEC or FINRA? If so, in what capacity?
• What professional designations do you hold?
• Do you have any areas of expertise?
• How long have you been with your current firm? Where did you work before?
• What investment products and services do you recommend to your clients? Why?
• Are there any products or services you don't recommend? Why?
Fees for Services
• How much will I have to pay for your services? Do you charge an hourly rate, flat fee or commission?
• Are you compensated any other way for handling my account? If so, how and how much? Who pays you?
• Do you or your firm impose any minimum account balances? If so, what are they? And what happens if my portfolio falls below the minimum?
Access and Communication
• How frequently will we meet to discuss my portfolio and the progress we are making toward my investment goals?
• How will you communicate investment performance results to me?
• For brokerage firms: Is your firm a member of the Securities Investor Protection Corporation (SIPC)?
• Who else in your office will handle my account?
• Have you or your firm ever been disciplined by the SEC, FINRA, a state securities regulator, or another federal or state financial regulator?
• Have you ever had a professional license revoked?
Can I contact some of your clients for a reference? Note that the professional is not required to provide client names. The employing firm may also have privacy policies that prevent the professional from sharing this information.
Questions for You
The professional will want to know something about you, too. You should be prepared to answer some or all of these questions:
• How much money do you have in savings and investment accounts? Where is that money—in the bank, mutual funds, individual securities?
• How much do you plan to add to these accounts each year?
• Do you have specific financial goals?
• Do your goals have specific time frames?
• How much investment risk are you comfortable taking?
• What other investment professionals are you working with?
• Do you have life insurance? How much?
At the initial interview (before you open your account), you should get a copy of the account agreement, fee structure and any other documents you need to sign when opening an account. Read the information at your own pace and use it to compare firms.
If the professional pushes you too hard to open an account on the spot, this might be an indication that he or she will be overly aggressive in pushing you toward certain investment decisions in the future.
Be cautious of any investment professional who promises you above-average account performance, or who says you'll be making risk-free investments. Risk is a part of investing, and nobody can guarantee that your investments will grow at a particular rate, or that you won't lose money.
For more tips, see Working With Your Investment Professional on FINRA.org.
Gerri Walsh is Senior Vice President of Investor Education at the Financial Industry Regulatory Authority (FINRA).
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