1. Resist high pressure sales tactics. Don’t make a decision at the first meeting. Take your time and do your homework. Don’t be afraid to say “no” or ask to be put on the firm’s “do not call” list. Call the Federal Trade Commission at (888) 382-1222 and include your phone number in the National Do Not Call Registry.
2. Get outside help. Older women are more likely to be the target of financial abuse. Get help from a knowledgeable and trusted friend, family member, attorney or CPA. If you don’t understand the investment, don’t make it.
3. Ask questions. Ask what licenses the salesperson has. Get copies of all documents you signed and all information shown to you. Never sign blank or incomplete documents.
4. Checkout brokers and advisors. Make sure the salesperson is properly licensed and doesn’t have a history of complaints or violations. Click here* to check your broker/advisor online or call the FINRA BrokerCheck hotline at (800) 289-9999. Also, check with your state securities administrator*.
5. Take notes. Keep detailed records of all meetings and conversations regarding your investments. They may come in handy if trouble arises.
6. Be realistic about your financial needs. You’ve worked long and hard to build your nest egg. Don’t speculate or gamble it away. Focus on your actual financial needs and avoid taking unnecessary financial risk.
7. Put your investment goals in writing. Carefully review the “investment objectives” and “risk tolerance” sections in your brokerage account agreement. If you are a conservative investor and need income from your investments, your primary objective should be “income” rather than “growth.” Avoid descriptions such as “aggressive” and “speculation.”
8. Regularly review and update your investment objectives and financial situation. As your financial situation changes, notify your financial advisor. Make sure any changes in your investment objectives or risk tolerance are verified in writing.
9. Monitor your investments. Don’t be overly trusting. Read everything sent to you. If something doesn’t seem right, contact the branch manager. Take notes of your discussions. If there is a problem, don’t hesitate to act. See Tip #10.
10. Report fraud or abuse. Don’t let fear or embarrassment stop you from complaining. Report abuse to your state securities administrator*. Consult with an attorney to discuss your options, including whether you may be able to recover your investment losses.
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NASD's list of "Prohibited Practices"
Recommending to a customer the purchase or sale of a security that is unsuitable given the customer's age, financial situation, investment objective, and investment experience. Investment in a particular type of security may be unsuitable or the amount or frequency of transactions may be excessive and therefore unsuitable for a given customer.
Purchasing or selling securities in a customer's account without first contacting the customer and the customer did not specifically authorize the sale or purchase, unless the broker has received from the customer written discretionary authority to effect transactions in the account or the broker was given discretion as to price and time.
Switching a customer from one mutual fund to another when there is no legitimate investment purpose underlying the switch.
Misrepresenting or failing to disclose material facts concerning an investment. Examples of information that may be considered material and that should be accurately presented to customers include: the risks of investing in a particular security; the charges or fees involved; company financial information; and technical or analytical information, such as bond ratings.
Removing funds or securities from a customer's account without the customer's prior authorization.
Charging a customer excessive markups, markdowns, or commissions on the purchase or sale of securities.
Guaranteeing customers that they will not lose money on a particular securities transaction, making specific price predictions, or agreeing to share in any losses in the customer's account.
Private securities transactions between a broker and a customer that may violate NASD rules, particularly where such transactions are done without the knowledge and permission of the sales representative's firm.
Trading for a firm's account in preference to a customer by trading ahead of a customer limit order, absent a valid exception.
Failure by a market maker to display a customer limit order in its published quotes, absent a valid exception.
Failing to use reasonable diligence to see that a customer's order is executed at the best possible price, given prevailing market conditions.
Purchasing or selling a security while in possession of material, non-public information regarding an issuer.