In the course of everyday life, most of us will need the services of an investment professionals from time to time. It might be for investment advice on where to place your personal savings or retirement funds or you might be buying options or futures to manage risk on the farm or ranch. Do you ever worry about handing your hard earned money over to someone else? Have you watched the news and heard the stories of people being scammed out of thousands of dollars? There are a few steps you can take to minimize that risk.
A few simple steps can help you avoid many problems. First, check to see if your broker is licensed and registered. This is a very simple process, FINRA (Financial Industry Regulatory Authority) has an online tool call BrokerCheck, that allows you to search by individual name or the company name. This report will tell you when an individual earned their securities licenses, their current and past employers and any complaints (and their resolutions) that were formally filed. Working with a licensed broker not only tells you the broker has a certain level of education and ethics training but also that they company they work for is responsible for their actions in most cases, thus protecting you as an investor.
Second, a similar tool is available to research specific investments to ensure they are registered with the Securities and Exchange Commission. This tools returns a huge amount of information can is a bit less user friendly but can be utilized to ensure the security you are considering is not a scam. Neither of these tools ensure you will make money but they will ensure you are purchasing a real investment product from a legitimate investment representative.
In Montana, the Office of the State Auditor (specifically the Commissioner of Securities and Insurance) is the criminal justice agency that oversees the securities industry. They are a valuable source of information of information and tips on how to avoid being scammed. The State Auditor’s office also oversees the insurance industry in Montana but we’ll leave that for another post.