Evaluating Investment Firms

• 1). Use FINRA's free BrokerCheck tool to research the professional backgrounds of FINRA registered investment firms and advisers (see link under Resources below). Information available includes the firm's address and legal status; names of owners and company officers; felony and misdemeanor charges and convictions for the past 10 years; regulatory initiated disciplinary actions; and bankruptcy proceedings.
  
  
• 2). Use the SEC's Investment Adviser Public Disclosure (IAPD) website (see link under Resources below) to view an investment firm's form ADV, which contains information about the firm and its operations. IAPD provides information on a firm's registration status to allow investors to ensure that firms are registered with and regulated by the SEC.
  
  
• 3). Use the North American Securities Administrators Association's website to identify your state regulatory authority's contact details (see link under Resources below). Search the regulatory authority's website for an investment firm's registration status and contact the authority with specific questions about a firm.
  
  
• 4). Visit potential investment firms and meet the investment adviser or team that will manage your accounts. Ask about each adviser's education, employment experience, regulatory disciplinary history and whether he has been sued by a client. Determine whether the investment adviser that will handle your account has any certifications, and understand what those certifications mean as recommended by FINRA (Reference 2). A wide variety of certifications are available and some are more meaningful to investors than others. Also ask whether the investment firm is limited as to the products it can or will offer to you.
  
  
• 5). Ask about the investment firm's fee structure, as recommended by the SEC (Reference 1). Firms might charge an annual flat fee, usually a percentage of your assets. Others charge a commission for each trade they execute on your behalf. Some firms charge a custodial fee for certain types of accounts, including IRAs and Roth IRAs, and some may charge an hourly rate for managing your accounts.