The 20-Minute Background Check for Financial Advisors

The 20-Minute Background Check for Financial Advisors

By Thomas Drew.


When it comes to your financial future, you can't be too careful. With that in mind, it is crucial that you conduct a background check on any financial advisor you are considering. While most advisors are upstanding individuals, the allure of big money and clients who are out of their comfort zone can attract the attention of unscrupulous individuals. Your first line of protection against shady advisors is a simple 20 minute online background check.


Step 1: Collecting Information


Before doing the quick background check, you'll need the following information from the advisor in question. Asking a few simple questions can help you easily find out a lot about your potential advisor. You may work with this person for years or even decades, so a little due diligence before you begin working together is time well spent.


The information you need:

  1. Advisor's full name, including maiden name
  2. The states the advisor is licensed in.
  3. Are they registered with the NASD? What is their CRD number?
  4. Advisor's website


Step 2: Searching


The next step is to log onto the following websites and read any disclosures in the prospective advisor's profile. You are looking for past improprieties, legal charges, suspensions or other negative issues in their file. An advisor with no disclosures is a very good thing. If you see a pattern, existing problems or other negative items you are not comfortable with, cross the name off your list and move on.


  • National Association of Securities Dealers (NASD.org)
  • Securities and Exchange Commission (SEC.gov)
  • North American Securities Administrators Association (NASAA.org)
  • National Association of Insurance Commissioners (NAIC.org )


After checking for disclosures, do a search on your favorite search engine for the advisor's full name with their city and state and see what comes up. You may be surprised with what you will find, which may include birth records, letters to the editor, legal judgments, divorces, articles, web site links and quotes. This can be a great way to find any potential landmines. I once looked up a potential business partner and found pages and pages of professional misconduct. You'll never know until you check.

This process will likely take you less than 20 minutes if you visit all the sources above, a small time investment for results. If the advisor has passed these preliminary screenings, it is time to do a short interview either on the phone or in person.


Are you comfortable interviewing a financial advisor? Do you know what questions are the most important? Read our guide on the best way to interview an advisor.