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Use Investor.gov, But Beware Its Limitations

Any broker with a decade of experience could easily appear clean on BrokerCheck, yet have a troubling record of mistreatment of customers.

The U.S. Securities and Exchange Commission (SEC) has branched out beyond sec.gov, placing helpful content at investor.gov. Bookmark it and visit often. It includes sections entitled “Introduction to the Markets,”Investing Basics,” “Research and Managing Investments,” “Employment to Retirement,” and many others. Among the advice that applies to the beat we cover here at InvestorsWatchblog is “12 Savings and Investing Tips for 2012.”  Tip #3 is:

Research investments before handing over any money. Smart investors always check whether an investment is reg­istered with the SEC by using the SEC’s EDGAR database or contacting the SEC’s toll-free investor assistance line at (800) 732-0330.

Tip #2 is:

Check the background of your investment professional. Many investors do not know that you can check the background of a broker or investment adviser. It’s free and easy – and a key step for avoiding investment fraud.

Tip #1 is:

Visit Investor.gov before making your next investment decision. Created by the U.S. Securities and Exchange Commission, Investor.gov is a free, easy to use web site with objective information on investing wisely and avoiding fraud. 
You can learn about financial products, research investment professionals, and find more information about the tips above.

The info you’ll find at investor.gov is helpful, but incomplete. My admittedly quick review found no information about understanding the cognitive biases that impact our investigations of investments and investment advisers. Without first understanding how we process any information we find, a search of the resources that the SEC recommends can do us little good.

I do have one bone to pick. The SEC’s recommendation that you use BrokerCheck to research financial advisers can leave you at risk. As I’ve covered many times, both on this blog and in The Vigilant Investor, BrokerCheck is dangerously incomplete. It does not include thousands of complaints that have been expunged from the system as a condition of settlement. While expungement has been limited since 2005, any broker with a decade of experience could easily appear clean on BrokerCheck, yet have a troubling record of mistreatment of customers. Bottom line, BrokerCheck cannot tell you what you most want to know; that is, that the broker you’re considering using has never been accused of mistreating his or her customers.

Investor.gov can help you, but it won’t protect you until you become a vigilant investor.

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