Providing insights into the backgrounds and experiences of financial advisors, brokers, and firms, BrokerCheck is a free tool that the Financial Industry Regulatory Authority (FINRA) provides to the public.
What is it?
Understanding BrokerCheck
In a perfect world, investors would feel assured that the financial professionals who were assisting them were trustworthy and competent individuals. Sadly, this isn't always the case. Like any profession, financial advisors exist on a spectrum of credibility and integrity, illustrating why BrokerCheck is so useful.
Besides offering insights such as whether financial advisors or firms are registered to sell securities, including stocks and bonds, mutual funds, and more, BrokerCheck can also inform individuals if advisors or firms can provide investment advice.
How it works
How BrokerCheck works
Providing a variety of information to the public regarding individual brokers and firms, BrokerCheck analyzes information that's collected in the Central Registration Depository program, a system that FINRA uses to support the licensing and registration filing requirements of the U.S. securities industry and its regulators.
Investors interested in maintaining their anonymity can rest assured that using BrokerCheck to inquire about financial advisors and firms will not lead to the subjects of the searches being notified of the request. FINRA also doesn't collect information about individuals using the BrokerCheck tool to investigate the credentials of financial advisors and firms.
Why it matters
Why BrokerCheck matters to investors
There are a variety of risks that individuals assume when they buy stocks or make other investments. But they shouldn't feel as if they've taken on risk by selecting a financial advisor. BrokerCheck provides individuals with insight into their financial advisors or firms.
A BrokerCheck report on an individual who is currently registered with FINRA or who has been registered within the past 10 years contains a variety of information. In addition to a brief overview of financial advisors and their credentials, a BrokerCheck report provides a registration history where individuals were employed and their qualifications, and it has a disclosure section that details customer disputes and disciplinary actions as well as pending criminal actions or allegations.
For those whose last registrations with FINRA ended before August 1999, BrokerCheck may have limited information.
Related investing topics
For brokerage firms, a BrokerCheck report provides brief overviews of the firms and their backgrounds. The report also provides insight into where and when the firms were established, as well as the identities of investors who possess controlling shares or have direct influence in the firm's operations. Information regarding any mergers, acquisitions, or name changes that have affected the firm is included. FINRA also notes that BrokerCheck reports offer a section that lists a firm's active licenses and registrations, the types of businesses it conducts, and other details pertaining to its operations. Lastly, there is information about any arbitration awards, disciplinary actions, and financial matters connected to the firm's record.
