How to Check Your Financial Advisor's Credentials
Don’t do business with a financial planner, financial advisor, investment advisor, or broker, without first checking their complaint record, and verifying their credentials. How do you do this? With two simple steps.
Ask What Agency (or Agencies) Oversee Their Business
- If the answer is FINRA, the advisor will hold some type of securities license, or perhaps several licenses. You can use the BrokerCheck feature on FINRA’s website to see if there are any complaints on file.
- If the answer is the SEC, you can use the SEC Investment Advisor search feature on their website to check out both the advisor and the firm they work for.
Some financial advisors, or financial advisory firms, may be dually registered with both regulatory agencies.
Ask What Professional Designations They Hold
FINRA has a page called Understanding Investment Professional Designations that lists each designation complete with a link to the organization that issued the designation. You can use this page to click through to an organization, check to see if the advisor really has the credentials they say they have and learn more about what those credentials mean.
You should look for financial planners that hold the CFP® designation. Go to Verify Your Planner’s CFP® Designation page to type in an advisor’s name to find out if they hold this designation. Unfortunately there many documented cases where dishonorable folks used credentials they did not have. You don't want to do business with someone who feels this type of deceit is okay. That's why it is important to check.
There are also other valid advisor credentials that apply to the tax, investment, insurance and retirement planning fields, such as a respectively a CPA, CFA, ChFC, and RMA or RICP.
Licenses and credentials are important. It is also important to hire an advisor that has experience working with people like you. Learn what questions to ask when you hire a financial advisor so you can be sure to find the right person.
Other Online Resources
In lieu of asking a financial planner where they are registered, you can type their name into an online resource called Brightscope, which will show you where they are members, what licenses they hold, and if they have any reported disclosure items on their record.
You can also use many types of online search engines specific to financial planners which will only list advisors who have passed a basic background check - meaning their credentials have been verified and they don't have a large number of complaints on file.
Most online search engines then allow you to narrow your search by geographic location, areas of expertise, or compensation method. Don't skimp on these types of background checks. Fifteen to twenty minutes of time spent online is a great investment when you're hiring someone to work with your finances.