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How to Do a Background Check

If the rash of ponzi schemes we’re seeing has taught us anything, it’s that we all need to take a strong, hard look at the people handling our money. Wall Street fraud attorney Jeff Sonn recommends conducting a background check on your financial advisor or broker, now matter how trustworthy he or she seems. Here’s how you can go about it:

1. If possible, check your broker out before you ever meet them. Find out if they were ever sued by checking the FINRA website and the SEC website. But don’t be content that this information is accurate. You can access PACER, the electronic records system of the U.S. courts, to check if any federal lawsuits were ever filed against your broker. PACER costs $0.08 per downloaded page and anyone can get an account.

2. Get an account with a database company that can do research on your broker. It may uncover lawsuits or bankruptcies that you missed.

3. Check your local courthouse for lawsuits. Look at any divorce records regarding their finances.

4. Ask the broker how much money they have under management and about any past lawsuits or arbitrations. It also helps to create a written financial plan to take into account your income and expenses, as well as short- and long-term objectives.

7. Find someone who is a fee-based financial planner or broker who will not charge commission for every trade and check their rates. 1% of assets is a typical rate per year.




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