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Questions to Ask Before Hiring a Broker

Investors are entitled to certain information about the financial professionals they hire to manage their assets, and the information investors need to make an informed decision about who to work with is publicly-available.  This information is an important tool in protecting against misconduct and investment fraud.

Ask Before You Invest

Where are you located, and where are you licensed to give investment advice or sell securities? Be very careful if you receive a "cold call" from someone you've never met claiming to be a stockbroker from another city pushing you to invest money "now" in order to get in on a "hot deal." The best advice is simply to hang up. There are plenty of reputable, local financial advisors with whom you can establish a relationship after meeting them in person, obtaining references, and verifying their credentials. 

Are you registered to sell securities or licensed to give investment advice? Under federal securities laws and state "blue sky" laws, financial professionals must be registered to sell securities to residents of their states. If they receive compensation for providing investment advice, they must also be licensed and registered.  If an individual says that he or she is not required to be registered, verify this with your State Division of Securities.

Is the investment you are selling or recommending registered? In addition to registration requirements for individuals and their firms, securities sold are required to either be registered or fall into an exemption category. If the sellers say that their investments are exempt from registration, ask which specific exemption applies, and then verify this with your State Division of Securities.

What is your Central Registration Depository (CRD) number? The Central Registration Depository allows investors to obtain information about a financial professional’s work history, background, licensing and registration, prior customer complaints, and any disciplinary history. This information can be found for free at

How long have you been in the investment industry? This information can be verified through  

Can you guarantee a certain amount or percentage return on my investments you recommend to me? This is a good test to see if your financial professional is honest and forthright. There is no such thing as a guaranteed return. If they answer this question, “yes,” end the relationship immediately. 

Can you send me some written information about yourself, your firm, and the investments you recommend to your clients? Investors have a right to this written information, and a financial professional should always be able to provide it. If they are reluctant to provide written information, it is a red flag that something may be amiss. 

Can you give me references from your clients in my state or community? Of course, no client to whom a financial professional refers to you is likely to be a dissatisfied one. However, you can get a sense of how the financial professional works.

Meyer Wilson
Meyer Wilson
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The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. Read More
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