Weekend Economists Toast the Apostle of Ireland March 14-16, 2014

[Demeter]

15. Don’t trust anyone until you do a background check

THE ARTICLE IS TALKING ABOUT BROKERS, BUT IT'S GOOD ADVICE IN GENERAL

http://www.marketwatch.com/story/how-to-tell-the-financial-pros-from-the-schmos-2014-03-14?siteid=YAHOOB



Many victims of financial fraud could avoid trouble by doing a simple background check before giving money to the bad guys. So imagine how alarming it is to note that the primary way that consumers check out brokers is flawed...That was the message sent recently when the Public Investors Arbitration Bar Association (PIABA) issued a report about the BrokerCheck service maintained by the Financial Industry Regulatory Authority (Finra).

BrokerCheck is a free online database that gives investors access to background information on brokers and firms that are now or that have been registered with Finra. It includes current licensing status and history, employment history and any regulatory issues, customer disputes, criminal complaints and other matters that help investors decide if a broker is a good risk. Finra started making records available online in the late 1990s, but created BrokerCheck in 2007. In 2009, more than 20 million searches were conducted on the site, with roughly 18.5 million summary records viewed and nearly 4 million requests for detailed reports.

Finra’s site says that the BrokerCheck service “should be the first resource investors turn to when choosing whether to do business or continue to do business with a particular firm or individual.”

Having written two books on choosing and working with financial advisers, I’m a big believer in the BrokerCheck service. It is far from perfect — no system is — but it is the easiest access the average consumer is going to get, and far too many individuals hire advisers without doing the most cursory of background reviews. MORE