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The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears

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Trust but Verify

Never give your money to a stockbroker without first checking FINRA’s BrokerCheck website or calling (800) 289-9999. This will tell you if anyone has filed complaints against the stockbroker, and if the stockbroker is involved, or has been involved, in any customer disputes or regulatory actions.

All stockbrokers are registered with the Central Registration Depository. You can find out if stockbrokers are properly licensed in your state and if they have had run-ins with regulators or received serious complaints from investors. You will also find information about the stockbrokers’ educational background and work history. It is also important to check with state securities regulators who often have more comprehensive information—especially about investor complaints. Contact information for the state securities regulator is listed on the North American Securities Administrators Association website.

Never give money to a stockbroker or advisor who is not covered by the Securities Investor Protection Corporation (SIPC). SIPC is like the Federal Deposit Insurance Corporation, which protects people if a bank fails. If you give money to a non-SIPC member, you may not get your money back if the firm goes out of business.

Most people never ask about their stockbroker’s qualifications or experience. They just hand over huge sums of money on the expectation that it will be invested responsibly. This always marvels the brokerage firm. The president says the first thing he ...

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