How To Run A Background Check On Your Canadian Financial Advisor

by Mike Holman

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Before you hire a financial advisor, it is important to do some research and make sure the advisor is who they say they are.  Did they really complete their CFP?  Are they licensed in your province?  Have there been disciplinary action against them in the past?  Just because a potential financial advisor wears a nice suit, doesn’t mean they are legit.

To complete a background check on an advisor, you only need their name. The company name they are licensed to deal with is also useful.

Check advisor registration

The Canadian Securities Administrators keeps a list of advisors who are licensed to sell investment securities.  This list includes everyone except individuals registered with the OSC (Ontario Securities Commission).  To check out advisors working in Ontario, go to the OSC site.

For both sites – Enter the advisor name – If the advisor is found, click on their name to retrieve their entire profile. This will tell you which securities they are eligible to sell. For example “Dealing Representative (Mutual Fund Dealer )” means they are eligible to sell mutual funds.  “Securities (Product)” means they can sell to stocks and ETFs.

These sites also indicate the firm the advisor is licensed under.

Background check and disciplinary actions for stock brokers

If your advisor is licensed to sell stocks, ETFs options etc then you can check the IIROC website to run a background check. This can be used to verify their employment, licensing, courses and disciplinary actions

The IIROC site contains a search button where you can search by name for an advisor. I tried entering the last name of a friend of mine (yes, I have friends) who is an advisor and sure enough, his name and employer appeared. I had to click again to generate a report which listed the following information:

  • Full name
  • Current employer and address
  • Previous IIROC employers and dates.
  • Approval categories – this tells you what the advisor is licensed to sell.
  • Provinces in which advisor is registered to trade
  • Industry courses
  • Regulatory disclosures
  • IIROC disciplinary actions

The Canadian Securities Administrators has a disciplined persons list which is easy to use. This list contains everyone in B.C., Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and New Brunswick who has been disciplined by the CSA.

Mutual fund saleperson background check

If your advisor is licensed to sell mutual funds then check the Mutual Fund Dealers Association (MFDA) site.  Don’t forget that a lot of advisors are licensed to sell both mutual funds and stocks ,so you should check for both.

Current cases against individuals and companies

The last place to check for disciplinary actions is in the ongoing cases area. These have to be researched on the provincial websites.

Warning lists

Some of the provinces keep lists of individuals and companies that “appear to be engaging in activities that may pose a risk to investors”

Verify CFP (Certified Financial Planner) designation

The CFP is the best designation for your financial planner to have.  To verify if your advisor has a CFP in good standing – visit this site and enter the name of the advisor.

Tip – This tool can also be used to find a CFP professional in your area.

Better Business Bureau

It might be worthwhile to check the Better Business Bureau.  Do a search on the company name, as well as the advisor.

Phone their head office

If you met an advisor outside their office, you should check their employment. If they say they work for Edward Jones, call the head office and verify.

Google search

Try searching for your advisor name and see what comes up. If the name is too common, add relevant words like “financial advisor” to the search.

Check your advisor references

As one of the last steps, you can ask your advisor for a couple of references. If you can get in touch with a reference, ask them what kind of service they are getting from the advisor. I would take these references with a large grain of salt – you don’t know what the relationship is between the reference and the advisor. You also don’t know how sophisticated the investor is – it’s possible they are getting very poor service and just don’t know any better.

If nothing else, a lack of references would be a strong warning sign that something is wrong.

United States search

Although your advisor is working in Canada, it doesn’t hurt to check if they had any previous problems in the US.  Check out these two sites for American financial advisors:

More information

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{ 4 comments… read them below or add one }

1 Paul H

Thanks very much for the information…I wonder whether the names of the parasites at Concrete Investments would show up on at least one of those websites?

2 SavingMentor

This is awesome information, thanks Mike! I love it when people put a lot of research into a post and provide a lot of useful links like you have done here.

3 Natalie MacLellan

Great post Mike. I agree with SavingMentor, very well researched.
Scammer Earl Jones wasn’t registered – step one might have saved a lot of hardship for many people.
I’d love to see background checks become a standard practice for all investors.

4 financial planner

Great article, the following article provides the similar information for researching and doing a background check on U.S. advisers:
http://www.claroconnect.com/Financial_Library/howto_background_check.htm

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