How to Check the Background of a Financial Advisor
// December 20th, 2010 // Uncategorized
A financial advisor is someone who can provide you with a lot of help in planning and managing your finances to ensure that you would be able to reach all of your financial goals. However, due to the sheer number of financial advisors in the market, it is not surprising that there have been reports of individuals who have been scammed by their “financial advisor” that they hired. In order to prevent this from happening to you, it is important to investigate or conduct a background check on the financial advisor you are considering to hire.
Here is a guide on how you can do this. 1. First, you need to verify the professional credentials of the financial advisor. After asking what his or her qualifications are, you would then need to verify his designations and certifications. 2. You should also check for any disciplinary actions that he or she has on file. To do this, you should first ask the financial advisor to provide you with a list of the organizations that he or she is regulated by. You should then check with the organizations to know whether they have any disciplinary actions on their file for the individual. The CFP Board, FINRA and your state’s insurance and securities offices all maintain disciplinary records. 3. You should also request for a copy of form ADV. Registered investment advisors should be able to provide this upon the request of the client. This form lists the financial advisor’s educational background, credentials, business, as well as his or her disciplinary history. It also has information about his or her fees, services and investment techniques and strategies. 4. You should also check references. Ask the financial advisor to provide you with three references. Contact them and ask them about their experience with the advisor. Whether you are looking for fee-based or commission based financial advisors, make sure that you would be conducting a background check of those that you are considering to hire. This would allow you to find a financial advisor in Michigan or in the state you are in who is reputable and experienced enough to help you with your particular situation.
