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Ask

Questions

Questions You Should Ask 

About Your Investments

Information is an investor’s best tool
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ASK QUESTIONS | 1

Ask Questions

That’s the best advice we can give 

you about how to invest wisely. We 

see too many investors who might 

have avoided trouble and losses 

if they had asked basic questions 

from the start. 

We encourage you to thoroughly 

evaluate the background of any financial professional with whom you 

intend to do business—before you 

hand over your hard-earned cash.

It doesn’t matter if you are a beginner or have been investing for 

many years, it’s never too early or 

too late to start asking questions. 

It’s almost impossible to ask a dumb 

question about how you are investing your money. Don’t feel intimidated. Remember, it’s your money 

at stake. You are paying for the assistance of a financial professional. 
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A good financial professional 

will welcome your questions, no 

matter how basic. Financial professionals know that an educated client is an asset, not a liability. They 

would rather answer your questions 

before you invest, than confront 

your anger and confusion later. 

In this brochure, you’ll find 

some questions that you should 

ask about investment products, 

the people who sell those products, and the people who provide 

investment advice to you. We’ve 

also included some tips on how 

to monitor your investments and 

handle any problems. 

Keep this brochure on hand 

when considering an investment 

and use it by asking the right questions before you buy. Have a pen 

and piece of paper ready to take 

notes on the answers. They can 

come in handy if there is a dispute 

later about what was said during 

the transaction. Taking notes also 

sends a signal to your financial 

professional: I’m a smart and serious investor who wants to know 

more about the risks and rewards 

of investing. 
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Investor Tip

Which financial professional you 

select is very important for several 

reasons. You’ll want to investigate 

thoroughly before doing business 

with a financial professional or firm 

that has a history of complaints or 

problems with regulators. Also, you 

should know that if your financial 

professional or his or her firm goes 

out of business or declares bankruptcy, you might not be able to recover your money—even if an arbitrator or a court rules in your favor.

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Questions About 

Products

• Is this investment product registered with the SEC and my state 

securities agency? 

• Does this investment match my 

investment goals? Why is this investment suitable for me? 

• How will this investment make 

money? (Dividends? Interest? 

Capital gains?) Specifically, what 

must happen for this investment 

to increase in value? (For example, increase in interest rates, real 

estate values, or market share?) 

• What are the total fees to purchase, 

maintain, and sell this investment? 

Are there ways that I can reduce 

or avoid some of the fees that I’ll 

pay, such as purchasing the investment directly? After all the fees 

are paid, how much does this investment have to increase in value 

before I break even? 
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• How liquid is this investment? 

How easy would it be to sell if 

I needed my money right away? 

• What are the specific risks associated with this investment? What is 

the maximum I could lose? (For 

example, what will be the effect of 

changing interest rates, economic 

recession, high competition, or 

stock market ups and downs?) 

• How long has the company been 

in business? Is its management 

experienced? Has management 

been successful in the past? Have 

they ever made money for investors before? 

• Is the company making money? 

How are they doing compared 

to their competitors? 

• Where can I get more information about this investment? Can 

I get the latest reports filed by 

the company with the SEC: a 

prospectus or offering circular, 

or the latest annual report and 

financial statements? 
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FOR MUTUAL FUNDS

• How has this fund performed 

over the long run? Where can I 

get an independent evaluation 

of this fund? 

• What specific risks are associated with this fund? 

• What type of securities does the 

fund hold? How often does the 

portfolio change? 

• Does this mutual fund invest in 

any type of securities that could 

cause the value to go up or down 

rapidly in a short period of time? 

(For example, derivatives?) 

• How does the fund perform compared to other funds of the same 

type or to an index of the same 

type of investment? 

• How much will the fund charge 

me when I buy shares? What 

ongoing fees are charged? How 

much will the fund charge me 

when I sell shares? 

• Is the fund portable? If I move 

my assets to another firm, will I 

be able to continue holding the 

fund or will I need to liquidate it? 
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Investor Tip

You can verify your broker’s disciplinary history by checking the 

Central Registration Depository 

(CRD). Either your state securities 

regulator or FINRA can provide you 

with CRD information. Your state 

securities regulator may give you 

more information from the CRD 

than FINRA, especially when it 

comes to investor complaints, so 

you may want to check with them 

first. You’ll find contact information 

for your state securities regulator 

on the website of the North American Securities Administrators Association at www.nasaa.org. To 

contact FINRA, visit FINRA’s BrokerCheck website at www.finra.

org, or call them toll-free at (800) 

289-9999.

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Questions About 

The People Who 

Sell Investments

• Are you registered with our state 

securities regulator? Have you 

ever been disciplined by the SEC, 

a state regulator, or other organization (such as FINRA) or one of 

the stock exchanges)? 

• How long has your firm been in 

business? How many arbitration 

awards have been filed against 

your firm? 

• What training and experience do 

you have? How long have you been 

in the business? What other firms 

have you been registered with? What 

is the status of those firms today? 

• Have you personally been involved in any arbitration cases? 

What happened? 

• What is your investment 

philosophy? 

• Describe your typical client. 

Can you provide me with some 

names and telephone numbers 

of your long term clients?
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• How do you get paid? By commission? By the amount of assets 

you manage? By another method? 

• Do I have any choices on how 

to pay you? Should I pay you 

by the transaction? Or a flat fee 

regardless of how many transactions I have? 

• Do you make more if I buy this 

stock (or bond, or mutual fund) 

rather than another? If you weren’t 

making extra money, would your 

recommendation be the same? 

• Are you participating in a sales 

contest? Is this purchase really in 

my best interest, or are you trying to win a prize? 

• You’ve told me what it costs me 

to buy this stock (or bond, or 

mutual fund); how much will I 

receive if I sell it today? 

• Where do you send my order to be 

executed? Can we get a better price 

if we send it to another market? 

• If your broker changes firms, 

ask: Did they pay you to change 

firms? Do you get anything for 

bringing me along?
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Questions About 

the Progress of 

Your Investments

• How frequently do I get statements? Do I understand what 

the statement tells me? 

• Is the return on my investment 

meeting my expectations and 

goals? Is this investment performing as I was led to believe? 

• How much money will I get back 

if I sell my investment today? 

• How much am I paying in commission or fees? 

• Have my goals changed? If so, 

are my investments still suitable? 

• What criteria will I use to decide when to sell?
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Investor Tip

When you ask these questions, 

write down the answers you receive and what you decided to do. 

If something goes wrong, your 

notes can help to establish what 

was said. Let your financial professional know you’re taking notes. 

They’ll know you’re a serious 

investor and may tell you more. 

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How to Handle 

Problems

Act promptly! By law, you only 

have a limited time to take legal 

action. Follow these steps to solve 

your problem: 

1. Talk to your financial professional and explain the problem. 

Where is the fault? Were communications clear? Refer to 

your notes. What did the financial professional tell you? What 

do your notes say? 

2. If your financial professional can’t 

resolve your problem, then talk to 

the financial professional’s supervisor (which, for brokers, is often 

the firm’s branch manager). 

3. If the problem is still not resolved, write to the compliance 

department at the firm’s main 

office. Explain your problem 

clearly, and how you want it resolved. Ask the compliance office to respond to you within 30 

days. If you’re still not satisfied: 
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4. Send a copy of your letter to your 

states securities administrator or 

to the Office of Investor Education and Advocacy at the SEC. 

At the SEC, we will research 

your complaint, contact the firm or 

person you have complained about 

and ask them to respond to your 

specific complaint or question. 

Sometimes our intervention yields 

a satisfactory result. If these steps 

don’t work, you may need to take 

legal action on your own. We can 

send you information on mediation 

and arbitration, and suggest how to 

locate a lawyer if you need one. 
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Notes
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How to Contact 

the SEC with 

Questions or 

Complaints

Contact the SEC’s Office of Investor 

Education and Advocacy for help. If 

you have access to the Internet, you 

can send us your complaint by using our online complaint form at 

www.sec.gov/complaint.shtml. 

Or you can reach us as follows:

U.S. Securities and Exchange Commission

Office of Investor Education and Advocacy

100 F Street, NE

Washington, DC 20549-0213

Telephone: (800) 732-0330

www.investor.gov

To order a copy of this publication, please 

visit www.pueblo.gsa.gov. To order by 

phone, call the Federal Citizen Information 

Center at (888)878-3256 Monday-Friday 

8am to 8pm ET.
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OFFICE of INVESTOR

EDUCATION and ADVOCACY

1-800-732-0330

www.investor.gov

SEC Pub. 001 (01/11)