Ethical Issues for Financial Advisors


Ethical Issues for Financial Advisors

You want financial advisor you can trust, but how do you determine if an advisor is really trustworthy before you select him?

Unfortunately, there is no regulation that requires advisors to document their records of compliance during the interview process. It is your responsibility to ask the right questions and check public records to verify the accuracy of advisor responses.

Public Data

The Internet gives you access to vast amounts of public data that documents the ethical histories of financial advisors. You just have to know where to look and what to look for. Your three best sources for information that document advisor records of compliance are:,, and your state's commissioners.


The Financial Industry Regulatory Authority ( regulates advisors and firms (broker/dealers) that have active securities licenses. It also maintains two years worth of data for sales representatives who let their licenses expire and it maintains a permanent file on representatives who have complaints on their records.

Use FINRA's BrokerCheck service to research advisor compliance records.


The Securities & Exchange Commission ( regulates Registered Investment Advisory firms (RIAs) that are responsible for more than $100 million of client assets.

You can view the firms' ADVs on the SEC website.

State Commissioners

Each state has securities and insurance commissioners. The securities commissioners duplicate some of the FINRA functions and they regulate RIAs with less than $100 million of assets.

You should check with these state agencies before you select a financial advisor.


It pays to be cautious when advisors use references to prove they are trustworthy. That's because no advisor will provide bad references. Some advisors even coach their references to make the right statements.


It is easy to misrepresent and/or omit information that is verbal. You have no written record of what was said to you. If there is a future dispute it is your word against the advisor's.

You should require documentation for any key information that impacts advisor ethics. For example, the advisor should document in writing that he has a clean compliance record at FINRA. Then you should go to the FINRA website to verify that information.

Why be extra cautious? It is your money.

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