RICHMOND — Whether planning for a new home, retirement
or your child’s college education, many Virginians seek assistance from financial
service professionals in managing and growing their money. The State Corporation
Commission (SCC) reminds investors of the importance of understanding the distinctions
between the various types of financial service professionals.
“When selecting a financial service professional, it pays to understand the differences
between a broker-dealer agent, an investment advisor, and a financial planner. Each
serves a different role in helping with your financial future and their obligations
to you as a client vary,” said Ron Thomas, director of the SCC’s Securities Division.
Anyone registered as an investment advisor must, by law, act as a fiduciary and
put the interests of his or her clients ahead of their own. However, broker-dealer
agents – which can include stock brokers, financial consultants, financial advisors,
and registered representatives – are only obligated to recommend securities that
are suitable for clients based upon factors such as the client’s age, risk tolerance
and investment goals. Financial planners design an overall plan for their clients
to save, invest, and manage their money. Planners who provide specific investment
advice – such as recommending particular financial products or investments – must
be registered as investment advisors and are subject to a fiduciary duty.
The Securities Division offers information on its website that provides basic information
on the various types of financial service professionals and their obligations to
investors. Before doing business with any investment professional, Thomas urges
investors to contact the Securities Division to determine whether the individual,
firm, or investment opportunity are properly registered and if there have been any
complaints or disciplinary problems involving that individual or his or her firm.
“The information you need to make an informed choice about who you trust with your
money is right at your fingertips,” Thomas said. He encourages consumers to ask
the following questions and get information in writing:
- What services do you offer?
- What licenses, registrations, qualifications, and experience do you have to offer
- Are you a broker-dealer agent, investment advisor, financial planner, or any combination
- Can you provide me with your Central Registration Depository (CRD) number, and,
if not, why not?
- Are you required to always act in my best interest?
- Do you have any potential conflicts of interest when providing me with investment
- How are you paid? Explain commissions or fees you may charge.
“Be wary of high-pressure tactics, pie-in-the-sky promises, or investment opportunities
that do not meet your particular objectives,” Thomas said.
To request background information about a stockbroker, contact the SCC’s Division
of Securities and Retail Franchising toll-free (in Virginia) at 1-800-552-7945 or
in Richmond at (804) 371-9051 and ask for all materials from the CRD about that
individual. For similar information about an investment advisor, ask for all materials
from the Investment Adviser Registration Depository. These computerized national
databases contain licensing and registration information on more than 650,000 stockbrokers
and more than 260,000 investment advisors. You can also receive information on their
employment, examination and disciplinary histories, civil judgments, arbitration
decisions, criminal convictions or indictments, bankruptcies, as well as pending
complaints, disciplinary actions, arbitration, and civil proceedings.
For more information, visit the Securities Division website at
or the North American Securities Administrators Association website at