Investors wanting to sell their rights to an income stream orinvesting in one that belongs to someone else need to be aware ofseveral risks, the SEC and FINRA warned.

In an alert issued Wednesday on what investors need to knowbefore buying or selling pensionor settlement income streams, both agencies said investors alsoneed to know what conditions come with promised higher yields.

Anyone receiving a monthly pension or regular distributions froma settlement following a personal injury lawsuit may be targeted bysalespeople offering an immediate lump sum in exchange for therights to some or all of the payments the person would otherwisereceive in the future, the SEC said.

Typically, recipients of a pension or structured settlement willsign over the rights to some or all of their monthly payments to afactoring company in return for a lump sum amount, which willalmost always be significantly lower than the present value of thatfuture income stream, according to the SEC.

The SEC and FINRA investor alert contains a checklist of questions beforeselling away an income stream such as asking if the transaction islegal and does federal law restrict or prohibit retirees fromassigning their pension to someone else.

Investors should also check the factoring company's record withthe Better Business Bureau, and research the firm on the Internetand with a financial professional, the SEC said.

The investor alert also warns investors who might be attractedto the yield offered by buying the rights to someone else's pensionor structured settlement to be aware that they may encountercommissions of 7% or higher, according to the SEC.

Pension and structured settlement income stream products may ormay not be securities and likely are not registered with the SEC,the agency said. The products could also be difficult to sell if aninvestor needs money and wants to sell the product. Their rights tothe income stream purchased could face legal challenges as well,the SEC added.

The SEChas posted additional information on what investors need to beaware of.