Investigate Your Broker’s Background
The top question we get from MoneyTrack viewers is. “How do I know that the person I’ve hired is honest and good at what he or she does?” No one is going to tell you whether that investment advisor can make you money or not. But with the headlines about billion-dollar scams done by “reputable” advisors Bernie Madoff and Allen Stanford, it’s even more important to at least double-check his or her background.
But here’s the best-kept secret about making sure you don’t lose your assets: Get the full name of the advisor/broker you are using, and the firm where she/he is working. With that information, you can go online to these two web sites:
• FINRA’s BrokerCheck: If the advisor works for a brokerage firm, s/he will be regulated by the Financial Industry Regulatory Authority. Enter their names to find out real information about the investment pro — work history, if s/he has been fired, and any client complaints on record.
• Your state’s Securities Regulator: Here’s a list of securities administrators in every state. Every investment advisor should be registered with their respective state. In the database, they have a “rap” sheet. Look for:
- Have they been sued or fired?
- Where they have worked before?
- Are there any complaints on file?
You can also use the state’s database to check out whether that investment your broker/advisor is pitching you is a legitimate one.
If you can’t find any information on these sites about your advisor, that should raise a red flag: It probably means s/he doesn’t exist in any of the regulators’ databases, and therefore is probably not a licensed or registered advisor.
It’s important to work with your advisor, not just hand your money to them for their safekeeping. Do your homework first to make sure that person is someone worth your trust – and your hard earned cash.