Investing Basics: Selecting your Broker-Dealer

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 goals and objectives.

Talk with potential sales representatives at several firms. Meet them face to face and ask each sales representative about his or her investment experience, professional background, and education.

Do your research. Find out if the representative and the Firm are registered with the Trinidad and Tobago Securities and Exchange Commission (TTSEC). Visit the TTSEC’s corporate website, www.ttsec.org.tt for a full list of registrants with the Commission. Understand how the sales representative is paid. 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. Ask what “fees” 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.

Never invest in a product that you don’t fully understand. Consult information sources such as business and financial publications. Information regarding the fundamentals of investing and basic financial terminology, via our online glossary, can be found on our Investor Education Website, www.investucatett.com .

Ask your sales representative for the prospectus, offering circular, or most recent annual report. Read them.

If you have questions, talk with your sales representative before investing. You also may want to check with another brokerage firm, an accountant, or a trusted business adviser to get a second opinion about a particular investment you are considering.

Keep a record of all information you receive, copies of forms you sign, and conversations you have with your sales representative.

Protect Yourself

Part of making the right investment decision is finding the brokerage firm and the sales representative that best meet your personal financial needs. Do not rush. Resist salespeople who urge you to immediately open an account with them. A high pressured sales pitch can mean trouble. Be suspicious of anyone who tells you, “Invest now or you will miss out on a once in a lifetime opportunity.”

Remember:

• Never send money to purchase an investment based simply on a telephone sales pitch.
• Never make a cheque out to a sales representative personally.
• Never send cheques to an address which is different from the business address of the brokerage firm or a designated address listed in the prospectus.
• If your sales representative asks you to do any of these things, contact the branch manager of the brokerage firm and the TTSEC.
• Never allow your transaction confirmations and account statements to be delivered or mailed to your sales representative as a substitute for receiving them yourself. These documents are your official record of the date, time, amount, and price of each security purchased or sold. When you receive them you should verify that the information in these statements is correct.

The Trinidad and Tobago Securities and Exchange Commission is not an investment adviser nor is it a brokerage house. This article is intended solely to provide you with the information you need to help you make sound investment decisions and to ensure that you are familiar with and understand your rights and responsibilities as a consumer of financial services. To lodge a complaint, ensure that you complete the prescribed complaint form located on the TTSEC website www.ttsec.org.tt.

Before investing, educate and empower yourself!

To learn more, visit investucatett.com, follow us on Facebook or call 624-2991. If you have any questions or comments feel free to email us at ccei@ttsec.org.tt.