How to Check a Financial Advisor’s Background

A financial advisor can help you manage your money and plan for retirement. Unfortunately, some financial advisors mishandle their clients’ money, take advantage of them, and may even break the law. According to a study conducted by researchers at the University of Chicago and the University of Minnesota, up to 20 percent of brokers at some large financial institutions have disciplinary records.

Financial advisors generally fall into two categories. Brokers buy and sell stocks on a client’s behalf, and investment advisors charge fees in exchange for giving advice.

Research a Broker or Investment Advisor

Before you hire a financial advisor to handle your hard-earned money, you should conduct a background check and ask some questions to find out if the person is trustworthy.

If you are thinking about hiring a broker, go to, a website run by the Financial Industry Regulatory Authority, to check the person’s record. You can find out if the broker is currently licensed, how long he or she has been working in the industry, how many exams he or she has taken, and whether he or she has had any recent complaints or regulatory actions filed.

If you are thinking about hiring an investment advisor, go to the U.S. Securities and Exchange Commission’s website. You will be able to find a detailed report about the person’s past employers and any disciplinary action.

Check to make sure the broker or investment advisor is licensed. If you work with an unlicensed broker or a firm that later goes out of business, you may not be able to get your money back.

When you meet with a financial advisor, ask how the payment system works and figure out whether the person is working in your best interest. If a financial advisor urges you to choose a specific product, ask if he or she is compensated financially for doing so. Ask about any disciplinary actions you uncover in your background check.

Contact Data Check for a Pre-Employment Background Check

If you run an investment company and are considering hiring someone to advise clients, you should conduct a thorough background check as part of the hiring process to verify a person’s education and past employment and to check for criminal convictions. This will help protect clients and can also protect the firm from liability. A background check can also include a check of a person’s credit to find out if he or she handles money responsibly. To conduct a background check on a financial advisor or on anyone else you are considering hiring, contact Data Check today.