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Demystifying FINRA: What Investors Need to Know

Working with a  Financial Professional can help provide potential long-term investment success, but how can people be confident their money is secure and their Financial Professional is working in their best interest? For many investors, FINRA, Financial Industry Regulatory Authority), helps provide peace of mind.

Check out these 4 reasons to work with a financial professional.

What is FINRA?

FINRA is a nonprofit organization that oversees U.S. broker-dealers. Authorized by Congress to help protect America’s investors, FINRA works to help ensure the broker-dealer industry operates fairly and honestly.   It oversees more than 624,000 brokers across the country and analyzes billions of daily market events.

How Does FINRA Help Protect Investors?

FINRA’s mission is to ensure everyone can participate in the market with confidence. Here are a few ways FINRA helps protect investors:

  • All broker-dealers that do business with the public in the U.S. must apply to become a FINRA member and undergo a substantive review. This review assesses many things, including a firm’s ability to adhere to FINRA requirements and to act in their customers’ best interest. FINRA also helps ensure a firm’s personnel doesn’t have a history of misconduct.
  • All member firms must provide periodic reporting to FINRA disclosing their financial condition. This helps ensure firms have sufficient liquid assets and investor funds are properly safeguarded.
  • FINRA members also undergo frequent inspections to help ensure compliance with rules and laws. Inspections can cover a range of issues, including the Financial Professional’s understanding of securities, customer experience and financials .
  • Member firms must provide FINRA with extensive background information on their individual Financial Professionals. This helps FINRA decide if an individual  Financial Professional presents a risk to investors and the firm.
  • Financial Professionals must pass qualifying exams administered by FINRA and comply with annual continuing education requirements.
  • FINRA also provides investors with a fair and efficient securities dispute resolution process.

How Can I Know if a Firm or Individual is Registered With FINRA?

Broker firms and individual  Financial Professionals are required by law to be registered with FINRA. However, fraudsters posing as brokers or  Financial Professionals unfortunately still exist. Some may even claim to be registered with FINRA in order to lure investors into scams.

That’s why it’s important to ensure the firms and  Financial Professionals you work with are FINRA members. You can do this by looking them up directly on FINRA’s BrokerCheck website, which will disclose if they’re registered to offer investment advice, sell securities or both.

What are Additional Ways to Vet a  Financial Professional?

Hunting for a  Financial Professional is like hiring someone to work for you. Ensuring candidates are FINRA members is step one. Next, you should consider interviewing prospective candidates to see if they’ll be a good fit for your needs. Here are some questions to consider asking:

  • What licenses and registrations do you hold? Are you a fiduciary?
  • What’s your experience in the industry and what other designations have you received?
  • What investments and services do you offer?
  • How much will products and services cost me now and in the future?
  • How do you get paid?
  • How does your experience and strategy align with my goals?
  • How will our relationship work? How often will we meet? Are you available for phone calls and emails outside of appointments?
  • How often is your firm examined by a regulator? Do you or your firm have a legal or disciplinary history?

Bankers Life  Securities is Here for You

Let a Bankers Life  Financial Professional help guide you through the challenges of investing. Check the background of our firm with FINRA’s BrokerCheck, and get in touch to learn how our personalized solutions can help fuel your potential long-term investment success.