Before you make a major purchase – car, television, refrigerator – most likely you’ve done some extensive research to ensure you are making the right decision. One of the most important decisions that investors make is choosing the right financial planner to work with.

How to do a background check on your financial advisor


Surprisingly,  more than 70% of all investors do not do a background check on their broker before hiring them.  Say what?

Yes, approximately 1/3 of people that decide to work with a financial planner do not check the background of that person that they are getting ready to hand over their life savings to.

With the names of Madoff and Sanford making headlines, it’s even more important to at least double check your advisor’s background. It may not be a sure all prevention method, but you can easily find out if the advisor has had any prior wrong doings on his or her record.

To show you how how easy it is to get information on a financial advisor, I thought I would do a little experiment.   Today’s experiment is doing a background check on myself.  I’ll show you the different sources you can go to do various background checks and what information to look for.

Taking just a little bit of time can save you tens of thousands of dollars from going with an unscrupulous advisor. Yea, one of the seven kinds of financial advisors I would like to punch in the face.

First things first: the unfortunate thing of me doing this is that I have a bit of confession to make…

My real first name is not Jeff. *Gasp*

I know, I know.  You might be shocked.   As you can see if you do a background check on myself, my parents blessed me by naming me Jan Jeffrey Rose.   There is no family history behind the name, it was just one that they liked. (Thanks Mom and Dad…!)

Growing up I opted to go by my more masculine middle name, Jeff.   You don’t know how much of a pleasure it is to get phone calls from telemarketers asking for “Mrs. Jan Rose”.


Now that that is out in the open, we’ll continue.   That is a pretty good example of what information you’ll be able to find when doing a little homework on your financial advisor.

1.  Is Your Financial Advisor a Certified Financial Planner?


CFP Board Background Information

Before choosing a financial planner, one thing you might want to consider is if they are a Certified Financial Planner™ professional.

Only those who have fulfilled the certification and renewal requirements of the CFP Board can display the CFP® certification marks. CFP® practitioners agree to abide by a strict code of professional conduct, known as CFP Board’s Code of Ethics and Professional Responsibility, that sets forth their ethical responsibilities to the public, clients and employers. 

By going to the website, you can use their search tool to find out if the planner has had any disciplinary actions against them.

As you can see with me, I’m squeaky clean.  I would like to thank the CFP board for allowing to abbreviate my first name with an initial.  :)

2. FINRA Broker Check®

A financial advisor that is considered to be a registered representative is regulated by FINRA (Financial Industry Regulatory Authority).  Typically if the advisor works for a brokerage firm, they will be regulated by FINRA.  I’m considered to be a dually registered representative since I both hold my Series 7 and 66 licenses which means I fall under FINRA’s rule.

To help investors keep tabs on financial advisors, they developed a service called FINRA BrokerCheck®.  All you need is the person’s name and you’ll soon have all the background information of the advisor available to you in a PDF format.

Here’s what pulls up when you first search for my name:

FINRA Broker Check

To get the full PDF, you click on the Broker link under my name in the search and then “Detailed Report” on the next page.

I was really quite impressed on the amount of information that they provide.  For my report it listed the following:

  • Previous firms that I was licensed with (I worked for LPL Financial and A.G. Edwards & Sons before starting my own financial planning firm)
  • Any disciplinary actions that had been filed against me (once again – none)
  • States that I’m licensed to transact business in
  • Industry exams that I’ve passed and when I passed them (Series 7 and 66)
  • All my previous employment history for the previous 10 years
  • Outside Affiliations/Other Business Interests – this will show if the advisor is involved with any outside business activities.  (As you can see on mine, I had listed my revenue from my Google Adsense)

It also shows that I am not currently registered with FINRA because I had to drop my Series 7 to start my own registered investment advisory firm.

3. Securities Exchange Commission- Investment Adviser Search

This is where the term Registered Investment Advisor (RIA) comes into play.  People or firms that get paid to give advice about investing in securities generally must register with either the SEC or the state securities agency where they have their principal place of business. Investment advisers who manage $25 million or more in client assets generally must register with the SEC.

If they manage less than $25 million, they generally must register with the state securities agency in the state where they have their principal place of business.

I hate to use this an example, but good ol’ Bernie Madoff is was an investment advisor.   That’s why the SEC has taken a lot of heat over the matter.

Since I’m a registered rep, my parent firm LPL Financial falls under the SEC’s watch (as well as FINRA’s).

You can do a search on brokers and advisors on the SEC’s website. The only information that I could find on the SEC’s site was my listing in FINRA, which the SEC links to.

If you do decided to work with a RIA, this would be your resource to do some investigating.  If they are a smaller outfit, you can check with the state regulator’s.  One source is the North American Securities Administrators Association.  The NASAA has helped in preventing investors from being subject to fraud for over one hundred years.

4. Don’t Forget Social Media

Using the above resources is a great way to find some really good information on your financial advisor, but what about just using Google? By simply “Googling” the advisor’s name, you might be surprised what you might find.

If the advisor is on Twitter, Facebook, or LinkedIn, you might also be able to find out some good information, too. For example, if the advisor has a public profile on Facebook you can see their latest updates and it may give you a clue on what type of person they are. That goes for Twitter, too. (You would quickly find out I am a huge fan of In-n-Out Burger, so obviously I’m a great advisor, right?) On LinkedIn, you can view all their connections and if anybody has recommended them.

As you can see there are plenty of resources to do some homework on your financial advisor before you hire them. Don’t allow yourself to be part of the 30% of people who don’t take the time to do a background check and end up getting burned.

If you are already working with an advisor and never did any research, you might want to do that now. Find something not so great? You need to heavily consider firing your advisor. (Here are 8 other warning signs that mean you probably need to fire them, even if their background turns out just fine.)

It’s much easier to return a lousy TV to Best Buy with little financial recourse. Choosing a lousy, unscrupulous financial advisor could cost you your future and leave you in financial ruins. Protect your investments by spending as little as 15 to 30 minutes researching your potential advisor before handing over your financial future to a crook.


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Comments | 2 Responses

  1. maryjanebrosnan says

    Nice post and informative as well! It would help a lot especially who faces foreclosures of their property and their homes! I can use this too, because we do all have our misfortunes. Great post! Thanks for sharing..

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