You have the right to expect that people who provide investment information and advice will be honest and fair. That standard includes:
Providing full and accurate information about an investment, including how it works and the factors that could affect return
Telling you about an investment’s risks — for example, that stock returns aren’t guaranteed or that a bond’s market value may fluctuate
Providing full disclosure of the costs of an investment, including fees, sales charges, and other expenses
Advising you about the obligations and restrictions associated with an investment, such as whether an investment is illiquid,
or whether you might have to make additional contributions in the future
Making recommendations that suit your financial situation, age, goals, and risk tolerance
Providing accurate records of the status and value of your account, including any charges or fees assessed
Clear communication tends to produce the best results — and prevent misunderstandings down the road. For example, you’ll want to be candid and specific about your goals and financial assets. You should also say if you’re anticipating major changes that could affect your situation, such as marriage, divorce, a new baby, or likely inheritances.
It’s also important to be honest about your comfort level with investment risk. If there’s anything you don’t understand about an investment, never hesitate to ask questions and always insist on clear explanations. It’s critical that any recommendations you’re asked to act on make sense to you. And you’ll want to clear up any misconceptions — for instance, about your financial goals or your risk tolerance — as quickly as possible.
After a meeting or phone conversation with your broker,
it’s a good idea to ask for a summary in writing to make sure you’re in agreement and to help you keep track of what you’ve discussed. If the letter reflects what you’ve said, you should sign and return it, keeping a copy for your records. If the letter is vague or leaves things out, ask for a more detailed revised statement.
