February 12, 2017

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The stock market is soaring but it's a little early to sing, “Happy days are here again.” Uncertainty and risk surround us. We face chronic high unemp...


February 12, 2017

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As baby boomers plan for and reach retirement the need for sound investment advice is growing. The tech wreck of 2000 and the stock market's roller coaster ride since then have shown many people that they can't go it alone when investing for the future. Which financial professional your clients' choose may be the most important investment decision they make.

These days, professional designations can be confusing. In some cases titles are used interchangeably. For example, a person who is certified as a financial planner is sometimes called a financial adviser, and at certain brokerage firms, stockbrokers are called Financial Advisers, Financial Executives, or Investment Counselors. In addition, some people have multiple credentials and work as advisers, planners, and brokers. To most clients, they all do the same thing; help with investing.

Whether your client uses a stockbroker, financial planner or investment adviser it is important to research the person's background as well as the background of the firm for which they work. Federal or state securities laws require brokers, investment advisers, and their firms to be licensed or registered, and to make important information public. Before your client invests or pays for any investment advice, make sure their stockbrokers, investment advisers, and investment adviser representatives are licensed.

Your client will want to know whether the financial professional they want to use has the experience and education your clients' needs require. Your client will also want to know whether the firm or the financial professional have had any run-ins with regulators or complaints, including arbitrations and lawsuits, from other customers. Finally, your client will want to know whether the firm and the financial professional are financially viable. Should improper conduct occur, your client will want to know that an arbitration award will be paid.

Thanks to the Internet, checking out a financial professional and their firm is easier than it has ever been. One phone call or web search may save your client from sending their money to a con artist, a bad financial professional or disreputable firm. 

How to check out Stockbrokers, Investment Advisers, and Certified Financial Planners


The Central Registration Depository ( "CRD" ) is a computerized database that contains information about most brokers, their representatives, and the firms they work for. You can find out if a broker is properly licensed in your state and if they have had run-ins with regulators or received serious complaints from investors. You'll also find information about the broker's educational background and where he or she worked before their current jobs. You can ask either your state securities regulator or NASD to provide you with information from the CRD. The state securities regulator may provide more information from the CRD than NASD, especially when it comes to investor complaints, so you may want to check with them first.

To request a copy of a broker's CRD you can contact the Illinois Secretary of State, Securities Department. At this writing their address is: 69 W. Washington Street, Suite 1220, Chicago, IL 60602. The telephone number is ( 312 ) 793-3384. If your broker is located in a state other than in Illinois you can go to the North American Securities Administrators Association website to find the address of the appropriate state regulator. The NASAA website address is www.nasaa.org .

The fastest way to check out a broker and their firm is to do a NASD web search at www.nasd.com under “Investor Information.” At this writing you can contact the NASD to check out a broker at: NASD BrokerCheck, P.O. Box 9495, Gaithersburg, MD 20898-9495. The telephone number is ( 800 ) 289-9999. The Fax number is ( 240 ) 386-4750.

Investment Advisers

People or firms that get paid to give advice about investing in securities generally must register with either the SEC or the state securities agency where they have their principal place of business. Investment advisers who manage $25 million or more in client assets generally must register with the SEC. If they manage less than $25 million, they generally must register with the state securities agency in the state where they have their principal place of business. Some investment advisers employ investment adviser representatives, the people who actually work with clients. In most cases, these people must be licensed or registered with the state securities regulator to do business with the public.

To find out about investment advisers and whether they are properly registered, read their registration forms, called the "Form ADV." The Form ADV has two parts. Part 1 has information about the adviser's business and whether they've had problems with regulators or clients. Part 2 outlines the adviser's services, fees, and strategies. Before your client hires an investment adviser, make sure they ask for and carefully read both parts of the ADV. If an investment adviser refuses to give your client his ADV, steer clear of him.
You can view an adviser's most recent Form ADV online by visiting the SEC website at www.sec.gov . Once there, click on “Check Out Brokers & Advisers” under “Investor Information.” Once there, go to the Investment Adviser Public Disclosure ( IAPD ) site. There you will find most, but not all, ADV forms. You can also get copies of Form ADV for individual advisers and firms from the state securities regulator, or the SEC, depending on the size of the adviser. If the investment adviser is registered with the SEC, you can get the Form ADV at a cost of 24 cents per page ( plus postage ) from the SEC at the Office of Public Reference Room 1580, 100 F Street, NE, Washington, D.C. 20549-0102. At this writing their telephone number is ( 202 ) 551-8090 and their fax number is ( 202 ) 777-1027.

Certified Financial Planners

If your client wants to use a financial planner you should check to make sure the planner is certified by the CFP Board. Currently, financial planners do not have to be licensed with the SEC, the NASD or the State of Illinois unless they are also stockbrokers or investment advisers. Your client can find a certified financial planner in their area by visiting the Financial Planning Association's website at www.fpanet.org . 

The Certified Financial Planner ( CFP ) certification is a financial planning credential awarded by the Certified Financial Planner Board of Standards Inc. to individuals who meet education, examination, experience and ethics requirements. CFP's are required to adhere to the CFP Board Code of Ethics and Professional Responsibility and to the Financial Planning Practice Standards. The CFP Board has the right to enforce them through its Disciplinary Rules and Procedures. You can check on a CFP's disciplinary history by visiting the Certified Financial Planner Board of Standards Inc.'s website at www.cfp.net . At this writing their consumer line is 888-237-6275.

As our population ages, knowing who your clients invest with is more important than ever before. “Investigate before you invest” applies to investment professionals as well as the investments they sell. A few moments on the telephone or online can save your clients needless losses and heartache.

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This web site is intended for general information purposes only and is not intended to be the rendering of legal advice for specific cases. It is recommended that you obtain the advice of an attorney for your individual situation because each matter is unique and personal. You should not act upon this information without consulting with an attorney. Transmission and receipt of materials provided by this website is not intended to create an attorney-client relationship. Sending e-mail to this firm or to an attorney at this firm will not create an attorney-client relationship. Please note that e-mail transmissions are not secure, therefore confidentiality cannot be assumed. This web site is not intended to be advertising and we do not wish to represent anyone desiring representation based upon viewing this web site in a state where this web site fails to comply with all laws and ethical rules of that state. This is meant to be informational only and consistent with our profession's obligation to help inform not only our clients but also to cultivate knowledge of the law to the public in general.

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