How Do You Check a Financial Adviser's Background for Free?

Short answer: You can check a financial adviser's background for free in a few minutes. Search their name on Investor.gov, which sends you to the SEC's adviser database or to FINRA BrokerCheck. Then read the firm's relationship summary (Form CRS). Together they show whether the person is registered, where they've worked and whether they have a disciplinary history.

Why Should You Check an Adviser Before Hiring Them?

Handing someone your savings is a big decision, and a polished website or a friendly first meeting tells you very little about a person's record. The SEC puts it plainly: unlicensed, unregistered people commit much of the investment fraud in the United States.

A background check won't tell you whether an adviser is a good fit. It will tell you whether they are allowed to do the job, whether they've moved between many firms, and whether customers or regulators have raised problems. Those are the questions to settle first, because they're the hardest to fix later.

How Do You Search an Adviser on Investor.gov?

Investor.gov is the SEC's free website for individual investors. Its search box is the simplest place to start:

1. Go to Investor.gov and type the adviser's name, or the firm's name, into the search box on the home page.
2. The search takes you to the SEC's Investment Adviser Public Disclosure (IAPD) database. Depending on how the person is registered, you may be sent to FINRA BrokerCheck instead.
3. Confirm the person and the firm are registered. Registration can be with the SEC, with a state or with FINRA.
4. Read any disciplinary history listed for the individual and for the firm.

If the person works for a firm, search the firm too. A clean individual record at a firm with a long disciplinary history is still worth a question.

What Does FINRA BrokerCheck Show?

BrokerCheck is a free tool from FINRA, the organization that oversees brokerage firms in the U.S. It covers brokers and brokerage firms, and it includes information on investment adviser firms. For an individual, a BrokerCheck report shows:

Section	What it tells you
Qualifications	The person's current registrations or licenses
Employment history	Roughly the last 10 years of jobs, inside and outside the securities industry
Disclosures	Customer disputes, disciplinary actions and certain criminal and financial events

FINRA keeps information about investment professionals in BrokerCheck for 10 years after they leave the industry. Some records stay permanently, such as final regulatory actions and certain criminal convictions.

How Should You Read Complaints and Disclosures?

A disclosure on BrokerCheck isn't automatically proof of wrongdoing. FINRA notes that some items may involve pending actions or allegations that have not been resolved or proven. To weigh what you find:

• Look for patterns. One old, resolved dispute reads very differently from several complaints about the same kind of product.
• Check the dates. Recent issues matter more than ones from early in a long career.
• Read the details. Each disclosure usually includes a short description and how it was resolved.
• Ask the adviser directly. A trustworthy professional should be able to explain anything on their record without getting defensive.

Frequent job changes are also worth a question. They can be innocent, but a long list of firms in a short time deserves an explanation.

What Is Form CRS, and Why Read It?

Advisers and brokers must give retail investors a relationship summary, known as Form CRS. According to the SEC, it tells you about the types of services the firm offers, the fees, costs and conflicts of interest, the standard of conduct the firm must follow, and whether the firm and its professionals have reportable legal or disciplinary history.

You should receive it when you start working with a firm, or when your account changes, such as when you roll over an IRA. You can also ask for one at any time. It's short, and it includes suggested questions to start a conversation about fees and conflicts.

What Red Flags Should Make You Walk Away?

Stop and get answers before you invest if:

• You can't find the person or their firm in either database.
• The name, firm or registration doesn't match what they told you.
• They pressure you to decide quickly or to keep the investment quiet.
• They promise high returns with little or no risk.
• They won't explain clearly how they're paid.

If something doesn't add up, your state securities regulator can confirm whether a person or firm is allowed to do business in your state.

The Bottom Line

Checking an adviser takes a few minutes and costs nothing. Search Investor.gov, read the BrokerCheck report if one exists, and ask for the firm's relationship summary. If the record is clean and the answers are clear, you can move on to the questions that decide fit: how they're paid, whether they act as a fiduciary and what services you'll get for the fee. Our guide to choosing a financial adviser covers those next steps.

Frequently asked questions

Is it free to check a financial adviser's background?

Yes. The SEC's search on Investor.gov and FINRA's BrokerCheck are both free to use, and neither requires an account.

What is the difference between Investor.gov and BrokerCheck?

Investor.gov is run by the SEC and sends adviser searches to its Investment Adviser Public Disclosure (IAPD) database. BrokerCheck is run by FINRA and covers brokers and brokerage firms, plus information on investment adviser firms. Investor.gov may send you to BrokerCheck automatically.

Does a complaint on BrokerCheck mean the adviser did something wrong?

Not necessarily. FINRA notes that some items may involve pending actions or allegations that have not been resolved or proven. Read the details, look for patterns and ask the adviser to explain.

What if I can't find my adviser in either database?

The SEC warns that unlicensed, unregistered people commit much of the investment fraud in the United States. If you can't find the person or their firm, don't hand over money until you've confirmed their registration, for example with your state securities regulator.

What is Form CRS?

Form CRS, also called a relationship summary, is a short document advisers and brokers must give retail investors. It covers the firm's services, fees, costs, conflicts of interest, standard of conduct and any reportable legal or disciplinary history.

Sources

1. Investor.gov (SEC): Check Out Your Investment Professional
2. FINRA: About BrokerCheck
3. Investor.gov (SEC): Relationship Summary

This guide is general information, not personal advice. Your situation may differ, so consider talking with a qualified professional, such as a fiduciary financial adviser, CPA or licensed agent, before making a decision.