Fraud Tip of the Day - July 1

Important questions to ask before investing your money

Before investing your money, it's important to ask the people giving you advice or selling you an investment a lot of questions. These questions should be a good starting point but don't limit yourself to what's on our list.

Are you registered with our state securities regulator? Have you ever been disciplined by the SEC, a state regulator, or other organization (such as the Financial Industry Regulatory Authority (FINRA) or one of the stock exchanges)?
How long has your firm been in business? How many arbitration awards have been filed against your firm?
What training and experience do you have? How long have you been in the business? What other firms have you been registered with? What is the status of those firms today?
Have you personally been involved in any arbitration cases? What happened?
What is your investment philosophy?
Describe your typical client. Can you provide me with some names and telephone numbers of your long term clients?
How do you get paid? By commission? Amount of assets you manage? Another method?
Do I have any choices on how to pay you? Should I pay you by the transaction? Or a flat fee regardless of how many transactions I have?
Do you make more if I buy this stock (or bond, or mutual fund) rather than another? If you weren't making extra money, would your recommendation be the same?
Are you participating in a sales contest? Is this purchase really in my best interest, or are you trying to win a prize?
You've told me what it costs me to buy this stock (or bond, or mutual fund); how much will I receive if I sell it today?
Where do you send my order to be executed? Can we get a better price if we send it to another market?
If your financial professional changes firms, ask: Did they pay you to change firms? Do you get anything for bringing me along?

Remember, these questions are just a good starting point for a smart investor. Good questions may depend upon the services or investment opportunity offered to you. No questions are dumb. The worst thing you can do is ask no questions at all.