If a financial advisor is going to buy and sell securities directly on behalf of clients, they must pass exams administered by FINRA and register with FINRA and state regulators. Often called brokers, these financial advisors work for broker-dealers that must be registered with the Securities and Exchange Commission (SEC), the main federal agency charged with enforcing securities laws. 3

Then there are investment advisors, people who are paid to give advice about securities. They must register with the SEC or, in the case of smaller operations, state securities regulators.4

You can check on a specific broker or firm by using FINRA’s BrokerCheck website. It tells you whether someone is registered to sell securities or give investment advice and gives other background on education and complaints. BrokerCheck also searches the SEC’s comparable tool, the Investment Adviser Public Disclosure (IADP) website. And if someone doesn’t come up on BrokerCheck, you can check with your state’s securities regulator.

Bottom Line

Regardless of whom you hire to help with your finances, make sure to take these basic steps to protect yourself and get the most for your money:

  • Ask for recommendations from friends and family, but also do your own independent review by interviewing people and asking lots of questions
  • Don’t hire anyone without verifying their background and credentials and checking if any complaints have been registered against them
  • Ask them to spell out their compensation clearly, including how you will pay them and whether they’ll be getting paid by anyone else for their work for you
  • If you’re using them to make investments, ask them if they are licensed to sell you the investment and then verify with BrokerCheck, the IADP site, and the SEC’s Action Lookup.