How To Check Up On Your Financial Advisor

Do you know if your financial advisor has ever been fined or reprimanded by the government regulators? Would you want to know if your advisor had been convicted of a crime in the past? I think we can all agree that you can benefit from doing some checking up on your financial advisor. The question is how can you actually do this checking? State and federal regulators have mandated very strict disclosure statements, but even I have a tough time reading through them. Fortunately, there are a couple of websites that make the process of checking up on a financial advisor a little easier. I recommend everyone do a thorough read through of an advisor you are considering working with, because it is amazing how much you can learn. Even if you have been with your advisor for a while, it is still a good idea to do a quick search. You might be surprised at what you find.

FINRA BrokerCheck – This website allows you to search for your investment advisor or the firm they are with, and see their legal disclosures. Just for an example, click to search “Firm” and type in “Serenity Financial Consulting.” All of the firms (in this case there is only one) with that name across the country will pop up. Click the blue link that says “Investment Adviser Firm” and then the blue link that says “Wisconsin.” Here you can find more information than you ever wanted to know about a firm. This search shows basic information such as location, phone number and the owner of the business. It also has much more detailed information about past legal troubles, how the firm charges fees, and more.

Click “Item 5” on the left hand menu under “Part 1A” to see how many employees the firm has, the types of clients they work with, and how they charge. This is a great way to double check your advisor, because if they say they are fee-only but this site says they accept commissions, you know they are dishonest and probably want to move on.

Click “Item 6” to see if the advisor or firm has any other business activities, such as being a real estate agent, attorney, or broker. This will give you insight into potential conflicts of interest.

Click “Item 11” to see if the advisor or firm has had any past legal troubles.

The last interesting link is “Part 2 Brochures” under Part 2 on the left hand menu. The brochure is a relatively new document that is mandatory for all advisors. It basically lays out in common language how the firm operates, how it charges, conflicts of interest, and more. I highly recommend reading through this document, and asking your advisor any questions that come up during your reading.

If you search for just your advisor and they are fee-based, then you will see blue links for “Broker” and “Investment Adviser Rep.” If you click on the Broker link, take a look at the right hand side for the question “Are there events disclosed about this broker?” Is the answer is “Yes” click “Get Detailed Report to learn more.

BrightScope – This website was originally started to provide workers with a way to compare their 401(k) plans with that of other employers. You can use the site to compare fees, investment selections, and more between multiple employers’ plans. The site now provides easy to read summaries of advisors brochure information. Although the information will probably be the same as the FINRA BrokerCheck, it is a little easier to see and digest.

The other benefit of BrightScope is you can actually use it to find a new financial advisor is you are still looking, because you can search my city or zip code. The FINRA BrokerCheck site is really only beneficial if you are searching for a specific person or firm.

Just because you find a disclosure doesn’t mean you should run out of your advisor’s door, but it probably warrants a discussion. I suspect every advisor is going to down play anything you find on their record, but I bet you can get a better idea of the circumstances surrounding the event. It pays to know as much as possible about the person you are entrusting your personal finances and investment portfolio to. Don’t be afraid to check, and definitely don’t be shy about asking questions.

So, did you do a search on your advisor? Anything come up? Did they have a clean record? Let me know your experience!

About the author

Alan Moore, CFP®, MS
Alan Moore, CFP®, MS

Alan is passionate about providing individualized financial advice to individuals and families, regardless of their net worth, income or investable assets. An educator at his core, he strives to serve as his clients’ guide, available to help with the sometimes stressful or exciting financial situations that life inevitably brings.

Alan is the founder of Serenity Financial Consulting, which he started after noticing the lack of hourly, as-needed financial planning advice available to consumers. With experience working in several nationally recognized firms including Kahler Financial Group and Financial Service Group, Alan combines his industry experience and technical knowledge with his entrepreneurial spirit and penchant for teaching others to create a refreshing style of truly personal financial planning.

Alan is a Certified Financial Planner™ professional and Certified Retirement Counselor™. He earned his bachelor’s degrees in Family Financial Planning and Consumer Economics and his Master’s Degree in Family Financial Planning from the University of Georgia. Driven by his desire to educate, Alan also taught undergraduate financial planning courses while in graduate school.

Alan prides himself on being active in his community and feels privileged to have served in the Georgia National Guard for four years before receiving an honorable discharge. Originally from Georgia, Alan now lives in Shorewood with his wife Melissa, and enjoys taking advantage of the abundance of activities that Milwaukee has to offer.

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