The federal or state securities laws have made it mandatory for brokers, investment advisers, and their firms to be licensed or registered in their particular states. There are also authorized to make important information public. Nonetheless, it is up to you to find that information and utilize it in protecting your investments. The good news is that this data can be easily obtained from the Internet.
Before you consider to invest or pay for investment advice, you need first to make sure that your brokers and investment advisers have not previously had any disciplinary problems with regulators or their other investors. You should also find out from them if they have been registered or licensed by the governing body. It is important to know this kind of information because there will be no way to recover your money as soon as this unregistered securities brokerage company becomes bankrupt even if the court rules in your favor.
By searching the Central Registration Depository (CRD) database, you will find a lot of information about most brokers, and the particular firms where they work. You will also find information about where these financial brokers worked before plus their educational backgrounds. You can further ask your state securities regulator to furnish you with more data from the Central Registration Depository since they can provide you with more detailed information especially when it comes to clients complaints.
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Once you check the registration status and record of your financial company, you need to find out whether or not the financial company is a member of the Securities Investor Protection Corporation (SIPC). SIPC does provide customers with protection if the financial firm becomes insolvent. If you place your money or securities in the hands of a financial firm that is not SIPC member; you will not be eligible for compensation by SIPC once the company goes out of business.
Once you settle on a few potential companies, it is vital to ask them a few questions during the time you visit them.Some of the questions you should ask are:
o Clarify to me what experience you have in handling clients, especially in my case?
o Which institution did you attend and what is your work history?
o Which products and services do you give and whether you can vouch for other products or services to me?
o What kind of payment method do you consent to for your services?
o Have you in the past had a disciplinary action taken against you by any government regulator for illegal conduct or have any of your customer who was not satisfied with the work you did take any legal action against you?
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.