Compensation Practices
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Tips from the American Assn. of Retired Persons for understanding stockbroker compensation practices:
* Recognize that your broker is a salesperson and that brokers make money from commissions. Don’t confuse a sales pitch with impartial investment advice. Ask questions.
* Learn about the types of commissions, which are subtracted from the value of your initial investment. In general, the lowest-risk investments earn brokers the smallest commissions.
* Always know what you are paying for your investments. You have the right to full disclosure of all investment costs, including commissions, markups and fees. Ask your broker.
* Read and understand your transaction confirmation slips.
* Read and understand your monthly brokerage account statement.
* Check out your broker’s, or potential broker’s, disciplinary record through the National Assn. of Securities Dealers and/or your state’s securities agency. The NASD has a public disclosure line at (800) 289-9999; you can call the North American Securities Administrators Assn. at (888) 84-NASAA for the number of your state agency.
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