Verify a financial advisor
Before you give anyone access to your money, run them through three free databases. Total time: 5 minutes. This is the single most effective fraud prevention step that exists.
Step 1 — Identify what they sell
The right database depends on what role they play. Most people fall into one of three categories:
- Broker / registered representative — earns commissions for selling securities (stocks, bonds, mutual funds, annuities). Use FINRA BrokerCheck.
- Investment adviser (RIA) — earns a fee (typically 0.5–1.5% of assets) for ongoing portfolio advice. Has a fiduciary duty. Use SEC IAPD.
- Both (dual-registered) — common at large firms. Check both databases.
Insurance agents, financial coaches, "wealth strategists," and anyone selling unregistered investments (real estate syndications, crypto funds, "private opportunities") often appear in none of these databases. That alone is a major warning sign.
Step 2 — Search the right database
FINRA BrokerCheck
Required registry for anyone licensed to sell securities. Search by name or firm. Free, instant, definitive.
- Active licenses and which exams passed
- Employment history (last 10 years)
- Customer complaints, arbitrations, settlements
- Regulatory actions, suspensions, bars
- Criminal disclosures
- Bankruptcies and judgments
SEC Investment Adviser Public Disclosure (IAPD)
Required registry for advisers managing $100M+ (SEC) or smaller advisers (state). Shows the firm's Form ADV, which is the most important disclosure document in finance.
- Form ADV Part 1 and Part 2 (the firm's brochure)
- Assets under management and number of clients
- Fee schedule and compensation structure
- Conflicts of interest and affiliations
- Disciplinary history at firm and individual level
- Custody and audit arrangements
State securities regulator
Catches advisers who avoid federal registration by claiming state-only practice. Each state has its own database; NASAA (North American Securities Administrators Association) directs you to the right one.
- State-level registration status
- State enforcement actions
- Complaints filed at the state level
- Continuing education compliance
Step 3 — Read the disclosures carefully
The number to focus on is "Disclosures." It catalogs every complaint, regulatory action, criminal record, and bankruptcy tied to the person or firm. Here's how to read what you find:
Clean record at a reputable firm. Move forward with normal due diligence: meet them, understand fees, ask for written fiduciary commitment.
A single old customer dispute or a minor compliance issue from years ago is not necessarily disqualifying. Read the detail. Ask the advisor about it directly. Watch for consistent pattern.
Multiple customer disputes for misrepresentation or unsuitable advice, recent SEC/FINRA enforcement action, or any fraud, theft, or securities-related criminal record means walk away. The pattern is the data.
If they sell securities or give investment advice and are not registered anywhere, they are operating illegally. Do not invest. Report them via the SEC tip page.
Bonus checks
- CFP Board lookup: cfp.net/verify-a-cfp-professional shows CFP-specific discipline.
- Fee-only directory: NAPFA lists fiduciary fee-only advisers (no commissions).
- Insurance license: Check your state's department of insurance for life-insurance / annuity sellers.
- Court records: Federal lawsuits are searchable on PACER (paid). State civil suits vary by jurisdiction.