Researching the background of an adviser is a crucial step when considering working with someone that can significantly impact your financial security and future. There are several reliable resources available to help you verify the credentials and disciplinary history of financial advisers and brokers. Here’s how you can find out about the background of an adviser using various tools and platforms.
SEC and State Oversight
Financial advisers and money managers are regulated by the Securities Exchange Commission (SEC) and state securities authorities. The SEC’s website provides free access to disciplinary actions taken against financial professionals, as well as some state actions. This database is a valuable resource for investors looking to verify the clean record of a potential adviser. However, it’s worth noting that the information typically only covers recent years, post-internet era. Visit the SEC Website for more details.
NASD’s Central Registration Depository
Stock brokers, distinct from money managers or financial advisers, must register with the National Association of Securities Dealers (NASD). Through NASD’s Central Registration Depository (CRD), you can access a list of resolved disciplinary actions against registered brokers. This database includes comprehensive information such as employment history, registration states, and even exam scores. Significantly, it reveals whether a broker was fired or resigned following misconduct, which can be a red flag. However, ongoing investigations or unresolved allegations are not listed. You can contact NASD at 1-800-289-9999 or visit the NASD Website for further information.
North American State Securities Administrators (NASSA)
All states are members of NASSA, a watchdog organization that typically discloses complete disciplinary files on financial advisers. These files may include arbitration awards, court judgments, pending cases, and even descriptions of the defense and claimed damages. NASSA is an excellent resource for obtaining a comprehensive view of any adviser’s disciplinary history.
Additional Resources
For those willing to invest in a more detailed investigation, hiring a lawyer or a private investigator to review CRD records can be worthwhile. These professionals can also access the Securities Arbitration Commentator and legal databases like Lexis/Nexis, which summarize arbitration outcomes and provide extensive public records, respectively.
If dealing with commodities or futures, the Commodities Futures Trading Commission (CFTC) offers a Disciplinary Information Access Line at 1-800-676-4NFA. This service provides details on whether a broker is a registered commodity broker, their license types, and any disciplinary actions taken.
Online and Social Media Checks
In today’s digital age, checking an adviser’s social media profiles and online presence can also provide insights into their professionalism and client interactions. Platforms like Facebook.com and Google can reveal reviews, testimonials, or any public grievances that might not be formally recorded. Additionally, 1800ADVISER.COM offers an online directory for Fee-Only professionals.
Conclusion
It’s important to view an adviser’s record comprehensively. A couple of complaints in a long, established career might not necessarily be a cause for concern, but multiple complaints or issues over a short period could be a warning sign. Given the complexities involved in verifying an adviser’s background, consulting with an independent Fee-Only financial adviser for guidance on these matters can be beneficial. This step ensures that you make an informed decision based on thorough due diligence.
______________________________
About this Article
This article was published and distributed by TheAdviser.com a trusted source of independent ideas. It should be viewed as general and educational information and not as financial, tax or legal advice. Individuals seeking advice tailored to their specific situation are encouraged to schedule a free consultation with a professional listed in the 1800Adviser.com directory. Both TheAdviser.com and 1800Adviser.com are owned and operated by The Independent Adviser Corporation. For additional information, please refer to their Privacy Policy and Terms of Use, Legal Notices, and Disclaimer.
