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Published on November 24th, 2009 | by Guest Contributor


Make Sure Your Financial Advisor is Legit

In the aftermath of the Bernie Madoff fraud and heist, it is important for people to know how to make sure their money is with a legitimate and regulated financial advisor.  

handshakeHere are questions to ask your present or prospective Financial Advisor:

  1. Are you registered as an investment advisor with the Securities and Exchange Commission (SEC)?
  2. Do you hold a Federal Securities License from the FINRA (formerly NASD)?
  3. Do you have a clean regulatory record? You can check up on this at  You will need the full name of the broker or firm.
  4. Who is the actual custodian of the assets?   Most advisors use large, SIPC insured brokerage houses like TDAmeritrade, Charles Schwab or Fidelity.

Also, take note, it is not customary to deposit money or write checks directly to the advisor or her firm.  Make sure your money is being held in your name.  Your advisor should have Limited Trading Authority to manage your account based on guidelines set up in advance by you and the advisor together.

Additionally, get references. The financial advisor should give you at least 3 to 5 references.  Ask clients about their actual experience with this financial advisor.

Finally, make sure that you understand what you are investing in.  Remember, if it sounds too good to be true, it probably is!

Other important factors to consider:

Does he/she have legitimate certification as a Financial Planner or a Public Accountant, have a Bachelor’s or Master’s degree in Financial Planning or Business Administration?

Is he/she a Registered Investment Adviser?

Does he/she hold FINRA licenses?

Type of Service
Fee based or commission based?

Financial planning, money management or both?

Level of personal service
How many clients does he/she have? There should be enough clients to suggest experience and respectability, and not so many as to indicate a lack of time to attend to your needs.

Unfortunately, no one has a crystal ball and even if an advisor has had great returns in the past, that does not always predict future events.  It is each individual’s responsibility to do the necessary due diligence before hiring an advisor, and to also remain informed and understand the risks and limitations of their portfolio.  It is ultimately your money, stay on top of it.

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3 Responses to Make Sure Your Financial Advisor is Legit

  1. Dave Lucas says:

    Great advice! I'm saving for your URL for the day I hit the New York Lottery big! ;) HAPPY THANKSGIVING!

  2. Thanks for your comment Dave! Of course you don't need loads of cash to start investing with a reputable advisor, but do let us know if you win it big!

  3. Pingback: Skydex Technologies Nasd Broker Check Google Maps « DIY Projects

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