Benefits with Seagate US LLC

Saving and Investing: Financial Professionals

Do I need an investment professional?

Are you the type of person who will read as much as possible about potential investments and ask questions about them? If so, maybe you don't need investment advice. However, if you're busy with your job, your children, or other responsibilities, or you feel you don't know enough about investing on your own, then you may need professional investment advice.

Before you invest, always check the following with the Securities and Exchange Commission (SEC) and your state's securities regulator:

• Is the investment registered?
• Have investors complained about the investment in the past?
• Have the people who own or manage the investment been in trouble in the past?
• Is the person selling me this investment licensed in my state?
• Has that person been in trouble with the SEC, my state, or other investors in the past?

Investment professionals offer a variety of services at a variety of prices. It pays to comparison shop. You can get investment advice from most financial institutions that sell investments, including brokerages, banks, mutual funds, and insurance companies. You can also hire a broker, an investment adviser, an accountant, a financial planner, or other professional to help you make investment decisions.

Some financial planners and investment advisers offer a complete financial plan, assessing every aspect of your financial life and developing a detailed strategy for meeting your financial goals. They may charge you a fee for the plan, charge a percentage of your assets that they manage, receive commissions from the companies whose products you buy, or a combination of these. You should know exactly what services you are getting and how much they will cost.

Remember, there is no such thing as a free lunch. Professional financial advisers do not perform their services as an act of charity. If they are working for you, they are getting paid for their efforts. Some of their fees are easier to see immediately than are others. In all cases, you should always feel free to ask questions about how and how much your adviser is being paid. If the fee is quoted to you as a percentage, make sure that you understand what that translates to in dollars.

In contrast to investment advisers, brokers make recommendations about specific investments like stocks, bonds, or mutual funds. While taking into account your overall financial goals, brokers generally do not give you a detailed financial plan. Brokers are generally paid commissions when you buy or sell securities through them. If they sell you mutual funds, make sure to ask questions about what fees are included in the mutual fund purchase.

Brokerages vary widely in the quantity and quality of the services they provide for customers. Some have large research staffs, large national operations, and are prepared to service almost any kind of financial transaction you may need. Others are small and may specialize in promoting investments in unproven and very risky companies. There's everything else in between.

A discount brokerage charges lower fees and commissions for its services than what you'd pay at a full-service brokerage, but generally you have to research and choose investments by yourself. A full-service brokerage costs more, but the higher fees and commissions pay for a broker's investment advice based on that firm's research.

The best way to choose an investment professional is to start by asking your friends and colleagues who they recommend. Try to get several recommendations, and then meet with potential advisers face to face. Make sure you get along. Make sure you understand each other. After all, it's your money.

Opening a Brokerage Account

When you open a brokerage account, whether in person or online, you will typically be asked to sign a new account agreement. You should carefully review all the information in this agreement, because it determines your legal rights regarding your account.

Do not sign the new account agreement unless you thoroughly understand it and agree with the terms and conditions it imposes on you. Do not rely on statements about your account that are not in this agreement. Ask for a copy of any account documentation prepared for you by your broker.

The broker should ask you about your investment goals and personal financial situation, including your income, net worth, investment experience, and how much risk you are willing to take. Be honest. The broker relies on this information to determine which investments will best meet your investment goals and tolerance for risk. If a broker tries to sell you an investment before asking you these questions, that's a very bad sign. It signals that the broker has a greater interest in earning a commission than recommending an investment to you that meets your needs. The new account agreement requires that you make three critical decisions:

1. Who will make the final decisions about what you buy and sell in your account? You will have the final say on investment decisions unless you give discretionary authority to your broker. Discretionary authority allows your broker to invest your money without consulting you about the price, the type of security, the amount, and when to buy or sell. Do not give discretionary authority to your broker without seriously considering the risks involved in turning control over your money to another person.
2. How will you pay for your investments? Most investors maintain a cash account that requires payment in full for each security purchase. If you open a margin account, you can buy securities by borrowing money from your broker for a portion of the purchase price. Be aware of the risks involved with buying stocks on margin:
   • Beginning investors generally should not get started with a margin account. Make sure you understand how a margin account works and what happens in the worst-case scenario before you agree to buy on margin.
   • Unlike other loans, like for a car or a home, that allow you to pay back a fixed amount every month, when you buy stocks on margin, you can be faced with paying back the entire margin loan all at once if the price of the stock drops suddenly and dramatically. The firm has the authority to immediately sell any security in your account, without notice to you, to cover any shortfall resulting from a decline in the value of your securities. You may owe a substantial amount of money even after your securities are sold.
   • The margin account agreement generally provides that the securities in your margin account may be lent out by the brokerage firm at any time without notice or compensation to you.
3. How much risk should you assume? In a new account agreement, you must specify your overall investment objective in terms of risk. Categories of risk may have labels such as income, growth, or aggressive growth. Be certain that you fully understand the distinctions among these terms, and be certain that the risk level you choose accurately reflects your age, experience, and investment goals. Be sure that the investment products recommended to you reflect the category of risk you have selected.

When opening a new account, the brokerage firm may ask you to sign a legally binding contract to use the arbitration process to settle any future dispute between you and the firm or your sales representative. Signing this agreement means that you give up the right to sue your sales representative and firm in court.