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Investor Checklist Cheat Sheet by

Investor Checklist
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Introd­uction: Investor Checklist

The key to finding the right investment services provider for you is to ask the right questi­ons­—both of yourself and of prospe­ctive providers. Remember, there are no foolish questions. Any reputable provider should be happy to discuss these issues with you and answer any questions you may have

Questions to Ask Yourself Before You Invest

* Do I need help developing strategies to reach my financial goals or do I simply want sugges­tions on approp­riate investment products to implement my goals?
* Do I want assistance with a few specific areas, or do I need a compre­hensive plan for my finances?
* Do I already have a portfolio of invest­ments that I need help managing?
* How involved do I want to be in decisions about my specific invest­ments?
* Would I prefer paying for investment services through a fee, commis­sions, a percentage of assets in my account, or a combin­ation of these?
* Would I prefer working with someone who is primarily considered a broker, an adviser, or a combin­ation of the two?
* How important is it to me that my provider has a legal obligation to act in my best interests and disclose potential conflicts of interest?

Questions to Ask Your Investment Services Provider

* What products and/or services do you offer? Are these offerings limited to certain types of products or only propri­etary products?
* What qualif­ica­tions and experience do you have to offer those products and services?
* How do you charge for those services? Do you receive compen­sation from other sources if you recommend that I buy a particular investment product?
* Will you break out all fees and commis­sions?
* Would my account be an advisory account or a brokerage account?
* Are you required by law to always act in my best interests? Will you put that commitment in writing?
* What potential conflicts of interest do you have when recomm­ending investment products to me, and will you disclose those conflicts?
* Will you provide me with a written record of any discip­linary history for you and your firm?
* Will you give me your regulatory disclosure statem­ent­s—Form ADV, which must be filed by investment advisers and/or Form U4, filed by brokers?
 

Types of Providers

Federal securities laws recogn­ize two types of provid­ers­—in­ves­tment advisers, who are in the business of giving advice about securi­ties, and
brokers, who are in the business of buying and selling securities on behalf of
customers.

Inve­stment advisers
are fiduci­aries. This means that they are required by law to put your interests ahead of theirs at all times by providing advice and recomm­ending invest­ments that they view as being the best for you.
• Investment advisers also are required to provide up-front disclo­sures about their qualif­ica­tions, what services they provide, how they are compen­sated, possible conflicts of interest, ownership and affili­ations, and whether they have any record of discip­linary actions against them.
• Investment advisers are regulated directly either by the U.S. Securities and Exchange Commission (SEC) or by state securities regulators primarily based on the amount of assets they manage.

Brok­ers
are generally not considered to have a fiduciary duty to customers, although this standard may apply in certain circum­sta­nces. Instead, brokers are required to know your financial situation well enough
to understand your financial needs, and recommend invest­ments that are suitable for you based on that knowledge.
• Brokers are not required to give the same up-front disclosure about conflicts of interest and ownership as provided by investment advisers.
• In addition to being regulated directly by the SEC and by state securities regula­tors, brokers are subject to regulation by the Financial Industry Regulatory Authority (FINRA), a self-r­egu­latory organi­zation.

Fina­ncial planners
are not separately regulated as planners. Instead, their regulation and the level of respon­sib­ility they owe customers depend on the services they provide.
• Financial planners providing investment advice must be registered or licensed as investment advisers and are subject to a fiduciary duty. Those
who sell products must be registered or licensed repres­ent­atives of brokers.
• Some financial planners perform other activities that do not involve securities and are not regulated under laws governing either investment advisers or brokers.

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