Julie Jason: Are you hiring a financial professional? 20 minutes of homework | Julie jason

Do you hate homework? How about 20 minutes of homework to check the background of the finance professional you want to hire? Here’s how.

Start with BrokerCheck (brokercheck.finra.org), a free tool from FINRA (the financial sector regulator). As you can guess from the name, FINRA regulates the brokerage industry.

On BrokerCheck, select the “individual” tab. Enter the person’s name. If there are too many results (there are 29 John Smiths pages), you can refine the search by inserting the name of the company he works for.

When the search result is displayed, the top portion of the page will include the person’s name, CRD number, the company they work for, and the company CRD number. The CRD (Central Registration Depository) number is a unique identifier issued by FINRA.

If you see a light blue circle with the letter “B” it indicates that a person is a “broker”, someone who works for a broker. A dark blue circle with an “IA” indicates that the person works for an investment advisor. If both circles appear, it means the person works for a “double registrant”, a company registered as both a broker and investment advisor.

These terms define the rules that an individual must follow when dealing with customers. (Two different sets of laws apply – the subject of a future column.)

Then you will find four boxes. There are sections on “Years of Experience”, “Licenses” and “Examinations”, all of which provide important general information about the person when you click on each individual box.

From my perspective, perhaps the most important box is “Disclosures”. If the box is gold, it means that there have been “customer complaints or arbitrations, regulatory actions, layoffs, bankruptcy filings and some civil or criminal proceedings of which they were part,” according to the site. BrokerCheck.

Clicking on the golden box will take you to more details about the disclosures, including the date, type and disposition of each issue. For more information, select the “Detailed Report” link above the company name on the right side of the page.

You can also find information about the company that the broker employs by selecting the “Company” tab at the top. This time you can enter the company name or CRD number, both located at the top right of the individual’s report.

The results screen looks like the individual’s screen, although only the first colored box, the disclosures, is the same. Again, this box is probably the one that will interest you the most.

For a firm, the “Disclosures” category presents a total number, with a breakdown by type (regulatory event, civil event, arbitration). Again, the “Detailed Report” link is available for additional information on each disclosure.

There is another important piece of information to review: At the top of the page, next to the primary business address, is a blue button labeled “Relationship Summary”. Selecting this will take you to the company’s CRS (Client Relationship Summary), a key information document required in 2020 by the United States Securities and Exchange Commission.

I am a supporter of CRS – if only more people were aware of it. The CRS is a two-page document (four pages for duplicates) that allows someone to quickly compare and contrast companies. This includes a discussion of the conflicts that are part of the way the company does business, which gives you a feel for the culture of the company. Obviously, the CRS is worth your time when looking for a finance professional or reviewing your current professional.

Yes, that involves doing 20 minutes of homework on your part. But it’s your money that’s at stake, and if someone gives you investment recommendations, isn’t it a good idea to know who you’re dealing with and the company behind them? BrokerCheck and CRS are a good place to start.

On another note, as I mentioned in a previous column, I am considering building a “regular readers” mailing list to get your perspective on different topics through short polls. If you are interested, email me at [email protected]


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