SEC Educates Investors about Opening Investment Advisory Accounts

The SEC Office of Investor Education and Advocacy ("OIEA") issued an Investor Bulletin detailing factors to consider when opening an investment advisory account.

The OIEA advised investors to always check – before opening an account with a financial professional – the background and disciplinary history of the individual or entity.

The OIEA recommended that investors consider personal goals, timeline, size of investment, risk tolerance and the costs associated with an account when considering potential investment advisers. The OIEA also urged investors to ensure that they understand the details of the contract before signing on with an investment adviser.

The OIEA noted that investors should consider both client fees and brokerage commissions when evaluating potential expenses that may be associated with an account. An investment adviser's brochure is required to provide this information. In addition, the OIEA provided a list of questions that investors should ask an investment adviser before opening an account.