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What lies behind a hand shake, smile and a promise from a financial advisor you have just met when we are looking for investment advice? There is not much to go by, except a referral from a friend, co-worker or family member. The Financial Industry Regulatory Authority (FINRA) bears the responsibility to inform the investing public concerning all brokerage firms and its financial advisors. The securities industry regulator is charged with the responsibility for maintaining and updating brokerage firm and financial advisor regulatory histories which include arbitration awards from customer complaints and FINRA disciplinary actions for sales practice violations. Should brokerage firms and financial advisors with histories of arbitration awards and disciplinary actions be a concern to investors?
FINRA Revamps Website to Better Serve Investors
FINRA has improved the website for investors to use with a better design and more resources to help search for the information needed to evaluate brokerage firms and financial advisors through the FINRA Broker Check website. The FINRA Broker Check website includes information, including:
Employment Histories;
Firm Ownership;
Types of Business Lines;
Affiliated Companies;
Securities Licenses Held;
State Licensed to Conduct Business;
Bankruptcies and Credit Problems;
Regulatory Actions; and
Customer Complaints.
The FINRA Broker Check information comes from the Central Registration Depository (CRD®) which maintains information for all brokerage firms and financial advisors licensed and registered by FINRA. The CRD is the online database with centralized information obtained by regulators through the securities industry registration and licensing process. Similar information concerning registered investment advisers (RIA) firms and investment advisor representatives (IAR) can be found from the Securities and Exchange Commission’s website at Investment Adviser Registration Depository (IARD).
Check Your Financial Advisor’s Background
As mentioned before, “What lies behind a hand shake, smile and a promise?” Is it better to ask now, or wait until it is too late to inquire. Securities industry regulatory actions might be a good place to start when you review your brokerage firm and/or financial advisor’s regulatory background. Investors have all types of information at their fingertips available through the internet. Why not check your broker before you invest your hard-earned money?