Pros and Cons of BrokerCheck

by | Sep 8, 2015 | Money and Finance

You may have seen the ads … the you-wouldn’t-do-[anything]-without-checking-online-first ads promoting BrokerCheck. BrokerCheck is the Financial Industry Regulatory Authority’s online tool to help investors protect themselves by being informed in advance about their potential broker.

What is BrokerCheck?
FINRA regulates the individuals and companies that sell or advise on securities, stocks, bonds and mutual funds. They have to be registered before they can sell. Information about them is now available to anyone, free, to check through FINRA’s new portal. The ads encourage you to “get important facts about your broker” before you invest.

How Does It Work?
By entering in the name of the broker or brokerage firm you’re thinking of work with, you can see their licenses, certifications, employment history, as well as whether there have been any complaints, violations, or regulatory actions taken against them. BrokerCheck can tell you:

 * Whether the broker or firm is registered: They can be registered as investment advisors, brokers, or both. If they’re not registered, they may not have the knowledge needed to appropriately handle your investment activities.
 * What, exactly, has previously been disclosed to FINRA: It is mandatory for registered brokers and brokerages to keep FINRA notified of any customer complaints, criminal convictions or regulatory actions. As an investor, you have a right to know about this before you hand over your life savings.
 * Details of their experience, including a broker’s work history and the history of the firm
 * What they’re qualified to do: Depending on the exams passed and licenses they hold, they can perform particular functions on behalf of clients. And they must be registered in every state in which they have customers.

Is It Enough?
Anything that helps investors help themselves, potentially steering clear of fraudulent or unethical brokers, is a step in the right direction. But critics have pointed out some shortcomings of BrokerCheck, mainly around whether there’s enough information available. Brokers are able to expunge their records of things like previous bankruptcy filings, and whether they have been subject to internal investigations at their firms.

Given that the alternative, previously the only alternative, was to wade through the databases of federal and state level regulators and talk to other agents about what they know, BrokerCheck is clearly a more helpful tool than not. Without it, diligence is more arduous and an inconvience to investors.

Once you’ve used BrokerCheck, turn next to the legal investment experts at to access their quick, confidential and careful accredited investor verification process.

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