Who Can I Really Trust When It Comes to Investing? How to Select an Investment Professional

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WASHINGTON, Nov. 30, 2011 /PRNewswire-USNewswire/ -- Finally, you are ready to invest. You have done your homework of researching different investment alternatives. Of course, you want to make sure you are on the right path, so you decide to consult an investment professional. But how do you identify such a person? Here are some steps you can take to find an investment professional that can meet your financial needs.

Think about your financial objectives and know what type of financial services you need. Some investment professionals can provide financial statement preparation and analysis, investment planning, tax planning, estate planning, retirement planning, education planning, and risk-management services. Other professionals may only be able to recommend a limited number of investment products. Knowing what you need will not only help you find the professional that's right for you, but prevent you from paying for services you don't want or need.

Talk with several professionals. Meet them face-to-face in their offices, if possible, or have them come to your home. Feel free to ask each of them about their areas of specialization, professional designations, registrations or licenses, education, work history, investment experience, products and services, and disciplinary history.

It is important that you understand how you will pay them for their services. Investment professionals are typically paid by an hourly fee, a flat fee, a commission on the investment products they sell you, a percentage of the value of the assets they manage for you, or a combination of fees and commissions.

Ask whether they receive any additional compensation or financial incentives based on the products they sell. Sometimes investment professionals and their firms receive additional compensation for selling a particular mutual fund or other investment product.  Make sure that the investment professionals and their firms are properly registered with FINRA, the U.S. Securities and Exchange Commission (SEC), or a state insurance or securities regulator and learn about their professional background, business practices, and disciplinary history. Most investment professionals need to register as investment advisers, investment adviser representatives, or brokers (registered representatives). Others may only be licensed to sell insurance. FINRA's Web site can help you find registration and other background information on these professionals.

Check out any professional designation by contacting the issuing organization and determining whether they are currently authorized to use the designation and whether they have been disciplined. And make sure you understand the requirements for a professional designation. Some organizations may require formal certification procedures including examinations and continuing professional education credits. Others may merely signify that membership dues have been paid.

If the investment professional will sell you investment products, ask if the firm they work for is a member of the Securities Investor Protection Corporation (SIPC). SIPC provides limited customer protection if a firm becomes insolvent. Ask if the firm has other insurance that provides coverage beyond the SIPC limit. SIPC does not insure against losses attributable to a decline in the market value of your securities.

Remember, part of making the right investment decision is finding the investment professional that best meets your financial needs. Do not rush. Do your background investigation. Resist investment professionals that urge you to hire them immediately.

For more information and examples on this topic, see "Resources for a better financial future" in the Web site of The Aspira Association http://www.aspira.org/. This publication was made possible by a generous grant from the FINRA Investor Education Foundation.

FINRA Investor Education Foundation

The FINRA Investor Education Foundation, established in 2003 by FINRA, supports innovative research and educational projects that give underserved Americans the knowledge, skills and tools necessary for financial success throughout life. For details about grant programs and other FINRA Foundation initiatives, visit www.finrafoundation.org.

SOURCE ASPIRA Association