Wondering how much you should worry?

By Scott Sloan - ssloan@herald-leader.com

To help put the recent economic news in perspective for Central Kentucky, the Herald-Leader spoke to University of Kentucky finance professor Dennis Officer on Monday about common questions from investors.

Question: Do you need to be worried about your investments, particularly if you're at one of these firms or other major firms?

Answer: Every investor is protected up to $500,000 by an organization called SIPC (Securities Investor Protection Corp.), an insurance protection company. What it does is protect investors against the loss of the securities, not the loss in value but the loss of the securities. If a brokerage firm was to go bankrupt, investors are protected up to $500,000.

Q: Should you examine switching brokerage houses?

A: You should never let market events let you determine if you switch brokerage firms. You should let that decision be events other than the market. During these times, this is probably not a good time to consider switching to another firm, but rather when things are a bit calmer.

Q: If you do switch, what are the risks?

A: One risk is that if you decide to sell everything in your portfolio, there are always taxes you could incur. ... The other downside to switching is you have to form a new relationship with someone at a new firm. It's during these kind of market conditions that you need to have a long-term relationship with a trusted investment adviser.

Q: What are qualities you should look for in an investment adviser or brokerage firm?

A: Probably the best source is referral from trusted family and friends ... and see if they've been happy through the ups and downs of the market.

Q: What have you been telling people as they've asked you what's going to happen?

A: What's finally starting to happen is these investment firms are clearing their balance sheet of some toxic securities they've had for a long time. While there's some pain in the short term, it's time to clear these balance sheets ... and we can move forward.