All Financial Advisers Are Screened by State and Federal Regulators

I hope it isn’t getting too redundant for me to remind you gentle readers that the headings of these posts are MYTHs.  This one is no exception.  Sort of.

Depending on who they work for and the kind of work they do, financial advisers are indeed somewhat screened by regulators.  After all, there are education, training & licensing requirements both up front and annually.
But does this mean that you can just trust any licensed “adviser”?  According to a recent article in Financial Advisor (a Financial Times service), the answer is . . .  “no”.  The title of one article appearing in today’s issue is, “Half the FAs Fired for Misconduct are Rehired in a Year”. (by Alex Padalka).  He goes on to say,  “Getting fired over misconduct doesn’t necessarily mean an advisor’s career is over — in fact, almost half of them are back and advising clients within a year of termination, according to a study cited by“.  In addition, 8% of FINRA registered advisors have a “disclosure event” on their records.  [I would provide both links but both sites are subscription services]  Finally, they found that “some firms specialize in misconduct and cater to unsophisticated consumers”.  Amazing.

If I were looking for an adviser* I would want to use every tool available to screen them.  So should you.  In addition to simple Google searches, here are two essential background check sites:

  1. BrokerCheck, and
  2. The Division of Finance and Corporate Securities (Oregon)

Your Constructive Comments are Welcome!
*You’ll note I spell “adviser” ending in “er” while most places you’ll see it spelled “or”.  The regulators want us to spell it “adviser”.  So I do.

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