Background Check Your Financial Adviser

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Thinking about handing over some of your hard earned cash to an adviser or firm? Or have you already handed over your cash to an adviser or firm? Do a background check on the person to see if their on the up and up by using these resources:

NASD’s BrokerCheck system has “the professional background, registration/license status and disciplinary history … [of] nearly 5,100 registered firms and more than 660,000 brokers.” This only works for brokers, most advisers won’t be on this unless they’re a registered broker as well. It basically gives you the skinny on the firm, prior names, where they’re registered, what licenses they have, tc.

  • NASD Arbitration & Mediation search site will let you do a search on all the disputes over a certain time period anyone has had with any financial institution that went through the NASD arbitration process.

North American Securities Administrators Association will list the regulators in your state and if you contact your state’s regulator they can provide all sorts of juicy information on that broker or firm. Not 100% sure how powerful this is because you actually have to contact someone to use it.

Lastly, a Investment Adviser Public Disclosure form must be filed with the state or the SEC by anyone looking to do business in the area. Their search form is very powerful and quite fast.

{ 3 comments, please add your thoughts now! }

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3 Responses to “Background Check Your Financial Adviser”

  1. Nagel says:

    For several years I worked for a money management firm and financial advisors were my customers. 75% of them are completely untrustworthy. They are like mortgage brokers in that they are not looking out for your best interest; they are looking out for their own. It is essential to get recommendations from friends and family, but that still might not be enough. If you do not know a lot about investing be careful.


  2. thc says:

    It’s important to note that only information about registered representatives of broker dealers will be listed on the NASD sites and only information about Registered Investment Advisors is found on the last site you listed. Confusing, isn’t it? But one of the first things people should know about their financial advisor is whether he/she is a registered rep or an RIA–there’s a huge difference.

  3. thc says:

    Nagel: I’m sorry you have such a low opinion of financial professionals. CFPs are bound by a strict code of ethics and RIAs are bound by law to put clients’ interests first. Apparently you did not have the opportunity to work with the cream of the profession. Too bad.

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