Investor Bill of Rights
As in life, when you invest, you have some basic rights. You should always keep these rights in mind when dealing with your brokers or financial advisors. The more aware you are of your rights, the less chance you have of being cheated. Here is a basic list of your Investor Bill of Rights.
- Ask for and receive information from a firm about the work history and background of the person handling your account, as well as information about the firm itself.
- Receive complete information about the risks, obligations, and costs of any investment before investing.
- Receive recommendations consistent with your financial needs and investment objectives.
- Receive a copy of all completed account forms and agreements.
- Receive account statements that are accurate and understandable.
- Understand the terms and conditions of transactions you undertake.
- Access your funds in a timely manner and receive information about any restrictions or limitations on access.
- Discuss account problems with the branch manager or compliance department of the firm and receive prompt attention to and fair consideration of your concerns.
- Receive complete information about commissions, sales charges, maintenance or service charges, transaction or redemption fees, and penalties.
- Contact your state or provincial securities agency in order to verify the Employment and disciplinary history of a securities salesperson and
the salesperson's firm; find out if the investment is permitted to be sold; or file a complaint.
Investments in General
This is a good list of questions that should be asked about any investment. They will help you determine the validity and value of both the investment in question and the brokerage firm you are dealing with. You should always write down the responses you receive. Remember that the brokers are supposed to work for YOU, so do not hesitate to get as much information as possible.
- Is this investment product registered with the SEC and my state securities agency?
- Does this investment match my investment goals?
- Why is this investment suitable for me?
- How will this investment make money?
- Specifically, what must happen for this investment to increase in value?
- What are the total fees to purchase, maintain, and sell this investment?
- Are there ways that I can reduce or avoid some of the fees that I'll pay?
- After all the fees are paid, how much does this investment have to increase in value before I break even?
- How liquid is this investment? How easy would it be to sell if I needed my money right away?
- What are the specific risks associated with this investment?
- What is the maximum I could lose?
- Does this product or investment have a surrender charge or contingent deferred sales charge?
- Where can I get more information about this investment?
Mutual Funds
This list of questions relates to the purchase of mutual funds. It is important that you find out all the information needed related to the specific fund(s) you are looking to purchase. Risk, previous performance and fees are key topics to ask about when looking to invest in mutual funds.
- How has this fund performed over the long run?
- Where can I get an independent evaluation of this fund?
- What specific risks are associated with this fund?
- What type of securities does the fund hold?
- How often does the portfolio change?
- Does this mutual fund invest in any type of securities that could cause the value to go up or down rapidly in a short period of time? (For example, derivatives?)
- How does the fund perform compared to other funds of the same type or to an index of the same type of investment?
- How much will the fund charge me when I buy shares?
- Is the fund portable? If I move my assets to another firm, will I be able to continue holding the fund or will I need to liquidate it?
- How many fund classes are available in this fund family? What is the difference between them?
Variable Annuities
Variable annuities are very tricky investments. They are not suited for everyone. You must be sure to get as much Information as possible when researching variable annuity products. Focus on questions relating to fees, penalties, lock-in periods and surrender charges.
- With my retirement goals, how soon will I need to access this money
- In my current financial situation, do I have enough money to purchase this product?
- What will I lose if I exchange this product at a later date?
- What percentage of my assets is appropriate for an annuity given my retirement objectives?
- What does the annuity guarantee?
- What are all the fees associated with this annuity?
- What is the best risk tolerance for my goals?
- How do the surrender charges work?
- When will I be able to access my money in the annuity for no extra cost?
- To whom do you usually suggest buy Variable Annuities?
- What percentage of my original investment is it possible to lose in this annuity?
- Do I need an annuity if I already have a 401(k) or an IRA?
We have compiled a list of Online Resources to help further inform you about investments and the precautions you should take when deciding upon a brokerage firm and the products it sells.
