You would not hire a contractor without checking references. Yet millions of investors hand their life savings to advisors they have never investigated. That is a costly mistake we see every day.
Why You Must Investigate Before You Invest
A background check reveals disciplinary actions, customer complaints, and credential exaggerations that sales materials never mention. The data is free and publicly available — you just need to know where to look.
This guide walks you through every tool at your disposal, from FINRA BrokerCheck to state regulators, so you can verify any advisor before trusting them with your money.
Step 1: Start With FINRA BrokerCheck
BrokerCheck is the single most important tool for investigating a financial advisor. It is free, maintained by FINRA, and covers over 1.3 million registered individuals and firms.
Go to brokercheck.finra.org and search by the advisor’s name or CRD number. You can also use our search an advisor tool for a streamlined experience.
What BrokerCheck Reveals
The report includes registration status, employment history (10 years), disclosure events, and regulatory actions. Pay close attention to the disclosure section — this is where complaints and sanctions appear.
Disclosure events fall into several categories:
- Customer disputes — Formal complaints filed by investors, even those denied or settled
- Regulatory actions — Sanctions by FINRA, the SEC, or state regulators
- Criminal charges — Felony convictions and certain misdemeanor charges
- Financial disclosures — Bankruptcies, judgments, and liens
- Terminations — Firms that fired the advisor for policy violations
Red Flags to Watch For
A single disclosure does not automatically disqualify an advisor. But multiple customer disputes, especially recent ones, signal a pattern. Review our guide on red flags your advisor may be mismanaging your money for a complete checklist.
Watch specifically for:
- Three or more customer disputes in five years
- Any regulatory action involving fraud or misrepresentation
- Employment gaps that suggest undisclosed terminations
- Advisors who frequently change firms
Step 2: Search SEC Investment Adviser Public Disclosure
If your advisor is a Registered Investment Adviser (RIA) rather than a broker, BrokerCheck may not capture their full record. The SEC maintains a separate database at adviserinfo.sec.gov.
This database shows the advisor’s Form ADV — a detailed filing that includes fee structures, disciplinary history, and conflicts of interest. Form ADV Part 2A is particularly valuable because it describes the advisor’s business practices in plain language.
What Form ADV Tells You That BrokerCheck Does Not
Form ADV reveals compensation methods (fee-only, commission, or both), custody of client assets, and any legal or disciplinary events. It also discloses whether the advisor acts as a fiduciary or operates under the suitability standard.
Step 3: Check Your State Regulator
State securities regulators maintain their own records, which sometimes capture disciplinary actions not yet reflected in FINRA or SEC databases. The North American Securities Administrators Association (NASAA) provides a tool to locate your state regulator at nasaa.org.
State records are especially valuable for advisors operating in a single state or those affiliated with insurance companies rather than broker-dealers.
Step 4: Review Form CRS
Since 2020, every broker-dealer and RIA must provide a Form CRS (Client Relationship Summary) to new clients. This two-page document describes the relationship in plain language: services, fees, conflicts of interest, and legal obligations.
Read it carefully. Understanding Form CRS can reveal whether your advisor puts their interests ahead of yours.
Step 5: Search Court Records
For a thorough investigation, check federal and state court records. PACER (Public Access to Court Electronic Records) covers federal cases, while most state courts have online search portals. Look for the advisor’s name and their firm’s name.
Court records can reveal lawsuits that never reached FINRA or the SEC — especially civil cases involving alleged fraud or breach of fiduciary duty.
What to Do If You Find Problems
If your background check uncovers disciplinary actions, complaints, or inconsistencies, you have options:
- Confront the advisor — Ask for an explanation. A trustworthy advisor will discuss disclosures openly.
- Seek a second opinion — Consult a different advisor or a securities attorney.
- File a complaint — If the advisor’s conduct harmed you, file a FINRA complaint.
- Call an attorney — For significant losses, contact a securities lawyer. Haselkorn and Thibaut offers free consultations at 1-888-885-7162.
Background Check Checklist
- Search FINRA BrokerCheck for disclosures and registration status
- Search SEC IAPD for Form ADV and disciplinary history
- Check your state securities regulator for local actions
- Review Form CRS for conflicts of interest and fee structure
- Search court records (PACER + state) for lawsuits
- Verify credentials — check if claimed designations (CFP, CFA) are real
- Call references — ask former clients about their experience
Your life savings deserve at least 30 minutes of research. Start with BrokerCheck right now.
Correction or Updated Info Needed? The information in this article includes the publisher's opinion and is based on publicly available materials believed to be accurate at the time of publication.
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