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Registered Financial Professionals

There are various types of investment professionals. And the products and services each type can—or cannot—provide will depend on the license(s) and training the person or firm has.

As you consider a particular person or firm—or as you construct a team to help you—here’s what you need to know about registered financial professionals.

  • What they are: A broker-dealer firm is in the business of buying and selling securities—stocks, bonds, mutual funds, and certain other investment products—on behalf of its customers (as broker), for its own account (as dealer), or both. The registered financial professionals who work for broker-dealers—the sales personnel whom some people refer to as stockbrokers—are technically known as registered representatives.
     
  • Who regulates them: With few exceptions, broker-dealer firms must register with the Securities and Exchange Commission (SEC) and be members of FINRA. Individual registered representatives, or registered financial professionals, must register with FINRA, pass a qualifying examination, and be licensed by your state securities regulator before they can do business with you. You can obtain background information on broker-dealer firms and their registered financial professionals—including registration, licensing, and disciplinary history—by using FINRA BrokerCheck or calling us toll-free (800) 289-9999. You can also contact your state securities regulator. To find your regulator, check the government listing of your phone book or contact the North American Securities Administrators Association at www.nasaa.org or (202) 737-0900.
     
  • What they offer: Broker-dealer firms vary widely in the types of services they offer, falling generally into two categories—full-service and discount  firms. Full-service firms typically charge more for each transaction, but they tend to have large research operations that their registered financial professionals can tap into when making recommendations, can handle nearly any kind of financial transaction you want to make, and may offer investment planning or other services. Discount broker-dealer firms are usually cheaper, but you may have to research potential investments on your own—though the firm websites may have a lot of information you can use. The products registered financial professionals can sell you depend on the licenses they hold. For example, a registered financial professional who has passed the Series 6 exam can sell only mutual funds, variable annuities, and similar products, while the holder of a Series 7 license can sell a broader array of securities. When a registered financial professional suggests that you buy or sell a particular security, he or she must have reason to believe that the recommendation is in your best interest based on a host of factors, including your income, portfolio, and overall financial situation, your tolerance for risk, and your stated investment objectives.

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