How to Check a Financial Advisor's Credentials

Researching financial advisors is easier than it has ever been. Of course, verifying a financial advisor’s credentials can help you feel confident in your decision to work with them. Advisors may hold various certifications, licenses and affiliations that indicate their expertise, commitment to ethical practices, and legal ability to offer financial guidance. Reviewing these qualifications and understanding what each certification or license signifies can reveal much about the advisor’s training and competence.

If you’re looking for a fiduciary financial advisor, SmartAsset’s free matching tool can connect you with up to three candidates who serve your area.

How to Screen a Financial Advisor

The first step you want to take when vetting a financial advisor is to ask for the person’s credentials. And when you start looking for a financial advisor, you will see initials like CFA, CFP®, CPA, CLU, and CAIA listed after their names. These designations indicate specific areas of expertise that an advisor is qualified in.

Here are 5 common certifications to look out for:

Chartered Financial Analyst (CFA): A CFA is an advisor whose expertise is in investments and securities. The certification is administered by the CFA Institute.
Certified Financial Planner™ (CFP®): This advisor is experienced in a wide range of topics in the finance arena. So, to become a CFP, a financial professional needs to complete a set of courses and pass a test. The test is administered by the CFP Board.
Certified Public Accountant (CPA): A CPA is a designation for financial analysts, accountants, and tax preparers. This certification is administered by the American Institute of CPAs (AICPA).
Chartered Life Underwriter (CLU): This certification is for insurance agents and it is administered by the American College of Financial Planning.
Chartered Alternative Investment Analyst (CAIA): A CAIA is for professionals who are managing alternate investments like hedge funds and real assets. This certification is administered by the CAIA Association.

Other common financial advisor certifications:

Chartered Investment Counselor (CIC): A CIC designation is for advisors who work in investment counseling and portfolio management. And this designation is administered by the National Alliance for Insurance Education and Research.
Chartered Financial Consultant (ChFC): A ChFC certification is for advisors who work with clients who have a niche need, such as financial planning for divorce or business planning. It is offered by the American College of Financial Services.
Certified Management Accountant (CMA): An advisor with a CMA is a financial professional who is an expert in management accounting. The Institute of Management Accountants (IMA) offers the CMA.
Financial Risk Manager (FRM): An FRM advisor specializes in risk management and is often found in banks working as a risk analyst. This certification is offered by the Global Association of Risk Professionals (GARP).
Chartered Mutual Fund Counselor (CMFC): A CMFC is an advisor who works specifically with mutual funds. This certification is administered by the College for Financial Planning.

Use the SEC and FINRA to Verify Financial Professionals

SmartAsset: How to Check a Financial Advisor's Credentials

An advisor’s background often includes work history, industry affiliations and any client complaints or legal actions taken against them. You can find much of this information through BrokerCheck for FINRA-registered representatives and the Securities and Exchange Commission (SEC) IAPD database for registered investment advisors (RIAs).

Investment Adviser Public Disclosure (IAPD): This tool on the SEC’s website will help you find your investment professional’s background if they are registered. You can enter their name on the IAPD website to see if they’re registered.
Financial Industry Regulatory Authority (FINRA) BrokerCheck tool: You can use BrokerCheck to find an advisor by their name, location, and Central Registration Depository. This will give you a snapshot of a broker’s employment history, regulatory actions, investment-related licensing information (including Series 7 and Series 66 licenses), arbitrations and complaints.
SEC Action Lookup – Individuals (SALI): This resource allows you to find information about financial advisors who have been named in SEC court actions or administrative proceedings that resulted in judgments or orders made against them.

These resources show whether an advisor has been involved in disputes with clients or regulatory violations. Additionally, asking the advisor directly about their career trajectory and areas of expertise can provide context to their background and areas where they can offer specialized guidance.

Understand Their Ethical Standards

Ethical standards vary between different types of advisors, with some advisors bound by a fiduciary duty and others not. Advisors who are fiduciaries, such as CFPs® or RIAs, are legally required to act in clients’ best interests.

Non-fiduciary advisors, like some broker-dealers, must adhere to Regulation Best Interest, which requires them to make recommendations that are in clients’ best interests. However, this ethical standard is less stringent than fiduciary duty and has drawn some criticism since it’s introduction in 2010. Understanding this distinction can clarify an advisor’s ethical obligations and help you assess their alignment with your financial interests.

Bottom Line

Finding a financial advisor who fits your needs is going to take some work. And with so many certifications available, so you should meet with multiple candidates before settling on one. Make sure to verify their credentials and ask if the person is a fiduciary, which means that the financial advisor must act in a client’s best interest.

Tips for Finding a Financial Advisor

Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you’re just starting to invest, working with a robo-advisor may be helpful. Robo-advisors offer automated portfolio management using algorithms, but they typically have lower fees and account minimums than traditional financial advisors.