Invest Wisely - Selecting Your Broker

Before making a securities investment, you must decide which brokerage firm—also referred to as a broker/dealer — and sales representative—also referred to as a stockbroker, account executive, or registered representative—to use. Before making these decisions you should:

Think through your financial objectives.
Talk with potential salespeople at several firms. If possible, meet them face to face at their offices. Ask each sales representative about his or her investment experience, professional background, and education.
Find out about the disciplinary history of any brokerage firm and sales representative through NASD BrokerCheck either at www.nasdbrokercheck.com or by calling 1-800-289-9999. NASD BrokerCheck provides information on disciplinary actions taken by securities regulators and criminal authorities. Your state securities regulator also can tell you if a sales representative is licensed to do business in your state.
Understand how the sales representative is paid; ask for a copy of the firm's commission schedule. Firms generally pay sales staff based on the amount of money invested by a customer and the number of transactions done in a customer's account. More compensation may be paid to a sales representative for selling a firm's own investment products. Ask what "fee" or "charges" you will be required to pay when opening, maintaining, and closing an account.
Determine the level of service you need. Some brokerage firms provide recommendations, investment advice, and research support, while others may not. The charges you pay may differ depending upon what services are provided by the firm.
Ask if the brokerage firm is a member of the Securities Investor Protection Corporation (SIPC). SIPC provides limited customer protection if a brokerage firm becomes insolvent. Ask if the firm has other insurance that provides coverage beyond the SIPC limits. SIPC does not insure against losses attributable to a decline in the market value of your securities. For further information, contact SIPC at 805 15th Street, NW, Suite 800, Washington, DC 20005-2207; or call (202) 371-8300.

Source: U.S. Securities & Exchange Commission (SEC) - Excerpt from "Invest Wisely: Advice from Your Securities Industry Regulators" (www.sec.gov/investor/pubs/inws.htm)

The SEC provides this information as a service to investors. The information is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.