Commentary: Have you seen those new BrokerCheck commercials on TV? You may recognize the "Gorilla Arms" commercial which has played a lot recently and can be found here.
With the help of these commercials, FINRA, the Financial Industry Regulatory Authority, would like to motivate anyone looking to hire a financial adviser to visit its BrokerCheck website first to vet candidates. In addition, FINRA would be overjoyed if plan sponsors used BrokerCheck to validate the backgrounds of their existing financial advisers as well. Similar to Angie's List for contractors, the BrokerCheck site lists complaints that financial advisers have incurred. BrokerCheck will tell you:
- Whether there have been any customer complaints filed against your adviser;
- The status or resolution of these complaints;
- Whether your adviser has been disciplined for any reason;
- If your adviser violated any rules or regulations;
- Whether your adviser has been terminated for any violations; and
- If your adviser is currently under investigation by the Securities Exchange Commission or FINRA.
It is strange that the BrokerCheck site doesn't experience a higher level of usage now. Most of us are very comfortable using websites to pre-qualify contractors to work on our homes, check out hotels before reserving a room or obtain a restaurant review before dining out. However, when deciding to hire someone to provide advice on millions of dollars in 401(k) plan assets, plan sponsors rarely seek an objective opinion on the financial adviser they are thinking of hiring (or already using).
While many websites providing information on contractors, hotels and restaurants require registration or charge a fee, BrokerCheck does not require you to create an account and its free. Check out your existing financial adviser (don't worry, your adviser will not know that you used BrokerCheck) by:
- Going to the BrokerCheck website.
- Entering your adviser's full name (it is helpful to know the advisers middle name or initial since there are over 650,000 advisers nationwide) and clicking the red "Check" button.
- A list of adviser names will appear. Click on the "Get Details" button for your adviser.
- Should a "Disclosure Event" appear, click on "Detailed Report" to obtain more information.
Any complaint, violation or disclosure event that you see should be considered serious. Studies have found that advisers who offend once tend to re-offend.
Whether you are looking for an adviser to help with your personal investments or searching for an adviser to work with your 401(k) plan, the best time to use BrokerCheck is before you hire someone. However, periodic checks of your adviser's status are also important.
Robert C. Lawton, AIF, CRPS, is president of Lawton Retirement Plan Consultants, LLC, a RIA firm helping retirement plan sponsors with their investment, fiduciary, employee education and compliance responsibilities. He may be contacted at firstname.lastname@example.org or 414.828.4015.
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