How to Check the Background of a Financial Advisor

When you begin thinking about investing some of your money, you have a lot of things to consider. One of the most important could be your financial advisor. After all, it’s your hard-earned cash that’s on the line. Investing is not a game, it’s extremely serious. Chances are the money you’ll be using is earmarked for your retirement, and your hope is to increase that amount exponentially. A wise person would want to know all they could before trusting their future to an unknown. Following are few tips on how to check the background of a financial advisor.

Be Patient

The process of hiring a financial advisor can be very simple–merely pick one out of the phone book. However, if you hope to hire one that will have your best interest in mind when they’re making financial decisions, you should be prepared to go through an in depth hiring process. You should first interview your prospective advisor, and then have a background check performed to make sure you’re not being scammed. The initial interview may be only a cursory get together in order to get acquainted. A more in depth interview can be conducted later.


If someone wants to become a professional financial advisor they must comply with federal and/or state laws regarding licensing and registration. They are in the public eye so everything they do is subject to scrutiny. That makes doing a background check easier. There are a number regulatory agencies involved in the process of ensuring that professional financial planners meet certain criteria and are above reproach in their financial dealings.

Central Registration Depository

Information regarding most brokers and financial planners, and their firms, are contained in a computerized database called the Central Registration Depository (CRD.) By accessing this database you can find out if the financial planner you’re considering is licensed in your state and whether or not they have a history of complaints from investors or disagreements with those in authority. You will also be able to find out about their educational background and employment history. Access to the CRD can be gained by contacting your state’s securities regulator or by contacting the Financial Industry Regulatory Authority (FINRA.) They will be able to provide you with the information you seek. The securities regulator for your state will probably be able to give you more in depth information, but checking with FINRA may also prove valuable.

Certified Financial Planner

A good choice for a financial advisor is someone who is a Certified Financial Planner (CFP). In order to qualify as a CFP you need to be certified by the CFP Board. Certified Financial Planners must agree to live by a stringent set of rules known as the CFP Board’s Code of Ethics and Professional Responsibility. You can begin a background check by going to the Internet website, A search of the website should reveal whether or not an individual has had any disciplinary action taken against them. You are looking for a professional to help you handle your money, and a qualified person will be licensed and registered.

Personal Interview

One of the most important aspects of choosing a financial advisor is to get to know the potential advisor personally. The best way to do this is to conduct a series of in depth personal interviews. A background check will provide you the information required to ask pertinent questions. If there were any complaints filed against the person you’re considering as your financial advisor, you should ask them about the situation and have them explain what happened. If their version of the story differs from the official account you may want to reconsider hiring that applicant. A background check can only reveal facts and figures; individual contact is needed to make an informed decision regarding a person’s character.

Guest post from Bailey Harris. Bailey writes for, a site that can help anyone do a criminal background check.

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2 Comment

  1. I’m glad that high schools are required to take a financial literacy class. At least we’re doing something to try to prevent overwhelming debt…

  2. Nice blog , good information about stock market, I realy liked it. Thanks for sharing this.

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