How to Verify Your Broker is Legit and Keep Your Investments Secure

When it comes to investing your hard-earned cash, you don’t want to be stuck with a broker that isn’t legit. Before you settle on a broker or financial adviser, you need to do your homework. There are plenty of scammers out there, as well as brokers who employ less than savory practices.

You don’t want to be on the wrong side of the situation, so it pays to do a little research ahead of time. Here are some ways to verify that your broker is legit:

1. Check with Professional Organizations

One of the first things you should do is check with professional and regulatory organizations to see where your broker stands.

One such tool is BrokerCheck, which is offered by the regulatory body FINRA. The FINRA database can help you get vital stats on brokers and brokerages that agree to their standards, and have been verified.

Not everyone is associated with FINRA, though. So what if you want to know if your broker or adviser meets fiduciary standards? The Securities and Exchange Commission maintains its own database of registrations for the Series 65 license, and you can access it through the Investment Adviser Public Disclosure page offered by the SEC.

When vetting a financial adviser, you can look up information from the National Association of Personal Finance Advisors (NAPFA), as well as other sites that reputably certify financial planning professionals.

Find out what certifications and licenses your broker claims to have, and then look them up.

It’s also possible to check with the Better Business Bureau to find out what kind of complaints might have been filed against a brokerage or your broker’s firm.

2. Inquire at State Offices

Many investment advisers and brokers are also required to register with their state. This can be a great way to see that your broker is properly licensed in your state.

Follow-up on this information with your state office, then make sure you verify your broker’s certifications and licenses are still up-to-date.

3. Research Online Reviews

In some cases, it’s possible to find information about the broker online through reviews. Just Google the investment adviser’s name and see what pops up.

You might find some unfavorable reviews, or you might see that the broker is an upstanding member of the community. Either way, the Internet can shed some light on the situation, and give you a better feel for how your broker works.

Another benefit to researching online, is that you might stumble across the broker’s blog or website. This can direct you to their social media channels, so you can see — in black and white — what they’re all about. It’s kind of like a test run before purchasing the product.

4. Get Personal Recommendations

When choosing a financial adviser or broker, you should ask for references. Call the references provided to get an account of how the broker performs. You can even ask your friends and relatives for their personal recommendations, then start your search from there.

You’re more likely to find someone reputable if someone you trust has had good experiences with a broker or financial adviser.

In order to reduce the chances that you will be a fraud victim, it’s vital that you vet your broker or financial adviser.

While you can’t completely protect yourself, you can reduce the chances of being taken in if you carefully research your broker before agreeing to let him or her manage your investments.

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Reader Comments

  1. Tahnya Krisitna says

    As a financial planner I love this post. I am not a huge fan of brokers because I find they lack the planning skills of a CFP. I would much rather use a self service discount brokerage firm to buy and sell myself online. Great post I am going to share it next Friday on our Dinks Finance Roundup. Have a great weekend.