How to Check a Financial Advisers Background: FINRA BrokerCheck Explained

Before handing over your money, use free databases to review an adviser’s licenses, complaints, and disciplinary record. Getty ImagesBefore you hand someone authority over your money, you have every right to check their record first. The tools exist, they are free, and the full process often takes fewer than 30 minutes. Here is where to look and what to watch for before you sign anything.Quick Answer: How to Check a Financial Adviser’s BackgroundIf you’re interested in working with an adviser, go to brokercheck.finra.org and search by their name or Central Registration Depository (CRD) number. Review all disclosure events, confirm their registration is active, and verify that their licenses match what they claim to hold. For Registered Investment Advisors (RIAs), also check adviserinfo.sec.gov and request their Form ADV. Always ask for the adviser’s CRD number before your first meeting.What Is at StakeA 2016 study found misconduct is a seriously concerning factor when choosing a financial adviser: 7 percent have records for misconduct; at some large firms, more than 15 percent do, and one-third of those are repeat offenders. Firms often fire offenders, but they can be rehired elsewhere, and 30 percent become repeat offenders, especially in areas where incautious consumers dominate.Fraudulent investment recommendations can cost clients thousands of dollars, but the tools to check all of this are free and maintained by federal regulators.What Is FINRA BrokerCheck?BrokerCheck is a free public database run by FINRA (Financial Industry Regulatory Authority). It covers more than 625,000 current and former brokers and more than 150,000 broker-dealer firms. Each record includes:Current registration status and active licensesEmployment history (typically the past 10 years)Disclosure events: complaints, disciplinary actions, terminations, and regulatory sanctionsExam qualifications and certificationsAccess it at brokercheck.finra.org. No account required.How to Search BrokerCheck: Step by StepGo to brokercheck.finra.orgEnter the adviser’s full name or CRD number (ask for it directly before your first meeting)Confirm their registration is currently activeClick “Disclosure Events” and read each entry in fullCheck employment history for unexplained gaps or frequent job changesCross-check their listed licenses against what they claim to holdSearching by CRD number is more reliable than a name search. Two advisers can share the same name; CRD numbers are unique to each individual.How to Read a Disclosure Event Event TypeWhat It MeansCustomer complaint (settled)Adviser or firm paid to resolve; no admission of guilt requiredCustomer complaint (dismissed)Closed without action; may be frivolous or reflect insufficient evidenceArbitration awardA financial judgment issued against the adviser or firmRegulatory actionFINRA, SEC, or a state regulator took formal disciplinary actionEmployment terminationFired or resigned while under investigation