5 Tips for Dealing with Your Securities Broker
"Trust, but verify" is a good motto for dealing with the people who help you buy stocks. Here's how savvy investors can help protect themselves.
![](https://cdn.mos.cms.futurecdn.net/nS9Q6DGZv9WqdqRA36gVWH-415-80.jpg)
It is no longer sufficient to be a “saver.” Saving money in a bank account is a critical first step to any long-term family financial plan. But after saving sufficient funds for dealing with expenses, both ordinary and unexpected, a long-term financial plan must reach beyond a savings account. Many Americans — now more than ever — have a relationship with a brokerage firm, to buy and sell stocks and other financial securities. Here are some things you should keep in mind.
1. Investigate before you invest.
Almost all brokerage firms and individual brokers are registered with the Financial Industry Regulatory Authority. FINRA is a “self-regulatory organization” under federal securities laws. FINRA operates “Broker Check,” which investors can access at https://brokercheck.finra.org/. This allows you to review the regulatory compliance history of the firm, and the individuals, you are dealing with.
2. Read your paperwork every month.
Take the time to review any changes to your account every month. If you’ve chosen electronic document delivery, log on at least once a month. This has a number of benefits. It compels you to stay abreast of your holdings, and it will alert you to any transaction you do not recognize. Such events are rare but can be very consequential. If you do find a transaction you do not understand, by all means call the brokerage. But … and this is important … if there is an error in your account, make sure to write to your brokerage firm about the error. Should there be any question about the validity of any transaction, you want to be able to say that the transaction was recognized quickly and documented as soon as possible.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
3. Understand your investments.
If you don’t understand an investment, then you shouldn’t be involved in it. Here is an actual investment pitch: “Objectives are achieved through a top-down, bottom-up process that identifies disparities in the economy or securities sectors, creating +/- changes in market perception.” Huh?
4. Understand that no investment is guaranteed.
Unlike bank deposits, investing involves risk. No one can assure you that any one of your investments is foolproof. Indeed, if you are told by any party, be it a brokerage firm, or any other person soliciting your money, that the investment is guaranteed, beware.
5. Make sure your securities are held by an SIPC member brokerage firm.
Brokerage firm failures are rare. However, if for any reason your securities broker cannot return your securities to you, you have certain protections available to you from the Securities Investor Protection Corp. To learn more about SIPC, how you are protected, and the limits of that protection, visit the SIPC website at www.sipc.org. You can check on the website to assure that your brokerage firm is, in fact, a member of SIPC.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Stephen Harbeck served as President and Chief Executive Officer of the Securities Investors Protection Corp., a nonprofit created by Congress to protect customers of failed brokerage firms, from 2003 to 2018. He guided SIPC through the insolvency of Lehman Brothers, the largest bankruptcy in history, the collapse of Bernard Madoff’s brokerage firm, the largest Ponzi Scheme in history, and other major insolvencies. Harbeck retired as President and CEO of SIPC in 2019. Since then he has acted as a consultant to the Shanghai Financial Court, and Shanghai Jiao Tong University, and is currently a consultant to the Japan Investor Protection Fund. SIPC, as a matter of policy, disclaims responsibility for any private publication by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of SIPC or the author's colleagues on the staff of SIPC.
-
Visa Is the Worst Dow Stock Wednesday. Here's Why
Visa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
By Joey Solitro Published
-
Another Analyst Moves to the Sidelines on Tesla Stock After Earnings
Tesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
By Joey Solitro Published
-
Confused by Annuities? Making Sense of the Different Types
Many investors aren't sure if annuities are a good option for meeting financial goals. Let's look at the different categories, along with their pros and cons.
By Kris Maksimovich, AIF®, CRPC®, CPFA®, CRC® Published
-
Talkin' 'Bout My Generational Wealth: Baby Boomers
With retirement, each generation has different priorities and challenges. For Baby Boomers, it's a matter of ready or not, here it comes.
By Alvina Lo Published
-
How to Avoid a Big Hassle if Your Financed Car Gets Wrecked
How an insurance check is made out for repairs can cause a world of problems if the lienholder is left out.
By H. Dennis Beaver, Esq. Published
-
Estate Planning Strategies to Consider as Election Nears
Are big changes in tax laws coming soon? Not likely, but you might want to take advantage of higher estate and gift tax exemptions well before the end of 2025.
By David Handler, J.D. Published
-
How to Get Your Money's Worth From Your Financial Adviser
A good financial adviser will focus on how your financial planning and investment strategy align with your lifestyle and aspirations.
By Pam Krueger Published
-
Think of Prenups and Postnups as Financial Planning Tools
These contracts provide a clear framework for asset management and protection and are especially useful if you get married later in life.
By Andrew Hatherley, CDFA®, CRPC® Published
-
Congratulations on Your Raise: Three Things to Do With It
We're not saying you shouldn't spend it on a new car, but there are some considerations to guard against lifestyle creep and to help ensure a comfy retirement.
By Andrew Rosen, CFP®, CEP Published
-
Check Off These Four Financial Tasks to Finish 2024 Strong
The new year is a popular time to set financial goals, but now is the ideal time to check how you're doing. Four tweaks could make a big difference.
By Daniel Razvi, Esquire Published