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My husband and I have been interviewing financial advisers. We were just about to make a decision when we ran the names of the two top contenders through FINRA BrokerCheck. FINRA is an acronym for the Financial Industry Regulatory Authority, a voluntary association that oversees about 630,820 registered securities representatives. Anyone can use BrokerCheck to investigate the background of a financial adviser or broker.
Both of the financial advisers who were our top choices to manage our retirement investments had negative reports on their records, but one of them had twice settled and reimbursed unhappy clients thousands of dollars after investing their money "inappropriately." Until we read this report, my husband really liked this adviser because he was responsive to our concerns and was able to offer some innovative approaches that my accountant husband appreciated. But knowing that this adviser had steered more than one person wrong and had to make amends made us nervous, so we dropped this person from consideration.
The other adviser also had a smudge on her record, but the incident was related to a ruling by the IRS, and she was one of many who guessed wrong in advance of the IRS decision. The company she works for made clients whole. Knowing that this had happened will certainly make us pay more attention to proposed future investments that might hinge on uncertain IRS positions, but my husband felt that this adviser was following the rules as her employer saw them and didn't make any bad decisions strictly on her own.
FINRA urges every investor considering working with a financial adviser or broker to use its vetting databases. Besides BrokerCheck, there is also Investment Adviser Search available on the Security and Exchange Commission's website and linked to BrokerCheck.
FINRA says that the vast majority of all brokers and advisers don't have these kinds of incidents on their records, so it was unusual that we would stumble on two in our search who did. Frankly, if I weren't married to someone who has spent his working life in the financial services industry and who feels capable of making judgments about the severity of these infractions, I would have dropped both of these candidates and searched for someone else.
Retirement planning is tricky enough without having to worry about whether your investment adviser is trustworthy.
There is obviously a lot to know about this. I like to stress that you have made some good points in your post.
I am with you. One disclosure, especially client related, speaks to the character and knowledge of a person. There are WAY more people to talk to with no blemishes. I am very proud of my clean U4!
It sounds like this person had some responsibility and may have lacked experience. These people don't techncally "work" for employers so your husband is giving her a bit too much slack, IMO. I would stay away.