ND Investor Guide | Planning

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Americans are realizing that they hold the key and bear the responsibility for their own financial futures. Relying on government or an employer probably won't suffice in the future. As consumers, we constantly face changes in the economy which can create confusion in our financial lives. Inflation, constantly changing tax laws, volatility of capital markets, and other factors beyond our control can disrupt plans and budgets. Growing concerns are prompting many people to seek the help of a financial professional.

1. Setting your Investment Goals
   Whether you are a novice or an experienced investor, there are several questions you need to consider before setting your investment goals and objectives:
   
   
   • What are my primary investment priorities?
   • Am I interested in long-term growth or in generating quick profits?
   • Do I plan to use investments for tax savings or as a primary source of income?
   • How much risk am I willing to take? How much of my investment can I afford to lose?
   
   
   
2. Be Prepared
   Before you can expect a competent financial planner to be able to help, you must take the following steps.
   
   
   • Compile all the data you can - the more specific the better - concerning your income, bank accounts, real estate, income taxes, wills, loans, budgets and other related financial matters.
   • Identify your goals and describe your objectives, whether as an individual, a couple or a family.
   • List any major changes, past, present and future, that could modify your objectives. These include happenings such as births, marriages, retirement, change of jobs and relocation.
   • Identify financial crisis and trouble spots such as mounting debts, tax increases or chronic illness.
   • Make a list of other professionals who assist you, or who have in the past, including attorneys, accountants, brokers and bankers.
   
   
   
3. Selecting Someone to Manage Your Money
   Anyone who is paid for investment advice is required by North Dakota law to be registered with the North Dakota Securities Department as an investment adviser. Similarly, brokers (those who sell securities) are also required by law to be registered with our office, as is the firm that employs them.
   
   Before hiring a broker or adviser, interview several and obtain literature from each. Smart investors will ask questions and learn as much as they can before they act. Remember, you are paying this person to help you shape your financial future. It is your responsibility and right to fully investigate their background, methods of practice and credentials.
   
   
   
4. Questions for your Broker/Adviser
   Are you, your firm and the investments you're offering all registered with the Securities Department or listed on a national exchange? How long have you and your company been in business? What is your educational background? What did you do before you became an adviser/broker? How does your company plan to use my money? How much risk is there in my proposed investments? How is the investment purchase price determined?
   
   • What are the fees for the transaction? How are you compensated? Do certain investments pay you a greater commission versus others? Is there a cap on fees?
   • With this investment, are there transactions I need to make by a deadline? Are there circumstances in which I may be required to come up with additional money?
   • Can you provide me with an exact written description (prospectus) of the investment in question?
   • Will you provide a written analysis of my finances and your recommendations?
   • Will you send me regular statements on my account? How often will we review the plan's progress?
   • What happens if I need to get my money back quickly? Am I responsible for finding a buyer?
   • Are there any fees I am required to pay before I can liquidate my investment?
   • Can you provide me with a list of clients I can call for references?
   • Are you willing to explain your investment proposal to my attorney or accountant?
   • Are any lawsuits or bankruptcies pending against you, your company or the company's officers and directors?
   • Should disputes arise, how will they be settled?
   
   When you ask these questions, write down the answers you receive. If you have problems or disagreements later, you'll have a record of what was said. Once you've selected an adviser or broker, request a written contract or letter that outlines the services you expect and the commissions or fees.
   
   If you plan to hire an investment adviser or broker, first contact the North Dakota Securities Department at (800) 297-5124 or 701-328-2910. We can confirm that the professional and the firm are properly registered. Additionally, we can tell you if the individual has any public disciplinary history in any state. A disciplinary history can also be obtained from the National Association of Securities Dealers (NASD) at (800) 289-9999.
   
   
   
5. Account Agreement
   Once you have selected a broker or investment adviser, you will be asked to fill out a new account form. While this financial profile is kept confidential, brokers and advisers are required to know your financial situation so that they can provide you with appropriate recommendations.
   
   Most brokerage firms require customers to sign a legally binding document known as a new account agreement. Before signing, make sure you understand its provisions. Consult an attorney if needed. Also, make sure you know whether any disputes that may arise are to be settled through arbitration, as opposed to a lawsuit.
   
   You will receive a monthly or quarterly statement showing your account activity. Carefully review the statement and question anything that you do not understand, including any activity you did not authorize. If you do have questions, contact your investment firm in writing. Keep all your statements and notes on file in case problems later arise.