Making the Right Decisions

Opening an Account

    • Be honest when filling out a new account form.  Your broker or representative cannot recommend investments to you unless he or she understands your complete financial picture and the level of risk you are willing to accept.
      • Do not sign the form until it is completed, the information is accurate and you understand and are willing to accept the terms and conditions it imposes upon you.  Take your time.  Ask questions and read the fine print.
        • Take a copy of your new account form when you leave.  It is the basis for determining what is a suitable or appropriate investment for you.

          Discretionary Authority

          You will have to make a very important decision at this point, such as who will make the investment decisions for your account.  Ordinarily, you will make your own decisions, unless you give your broker discretionary authority to make those decisions for you.

          • Discretionary authority allows your broker to make investment decisions, without consulting you about the price and or type of security and when to buy and sell,  based on his or her determination of what will best meet your investment objectives.
          • If you decide to give your broker discretionary authority for your account, you should do so in writing.  If you give discretionary authority, it is even more important to review and understand your monthly statements, so that you know what you have purchased and how frequently those investments are being made.

          Levels of Risk

          • Your new account form will require you to specify the level of risk you are willing to take in order to achieve your overall financial objective.  It is important that you understand the categories used.  Ask your broker to explain each category, ask questions and make certain that you completely understand the amount of risk involved in each category.
          • As a basic rule:  The higher the expected rate of return, the greater the risk.  Risk means that you could lose some or all of your investment. If you are a risk taker, be sure that your broker understands that fact, so he or she can help you select investments right for you.

          Rules of thumb:

          • Never make your investment check payable to the sales representative
          • Don't make an investment decision on a product or a brokerage firm based solely on a telephone solicitation or sales promotion.
          • Do not file or throw away your account statements or transaction confirmations without first reading them thoroughly and verifying them for accuracy.
          • Do not invest based on "inside information", "a stunning new development" or "a dynamic new product" without investigating for yourself.
          • Stick with your common sense.  If it sounds too good to be true, it probably is.  If you are promised spectacular returns, such as "your money will double in a year or less", be skeptical and ask questions.
          • If you think there is a problem with your account or brokerage firm, don't wait.  Call your brokerage firm, the Vermont Securities Division,(802)828-3420 or FINRA,  to report the problem immediately.

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