Finra's BrokerCheck link mandate for adviser websites effective today

Advisers and firms must clearly reference and link to regulator's search tool on their websites

Jun 6, 2016 @ 12:36 pm

By Alessandra Malito

Starting Monday, financial advisers and firms must include on their websites a clear reference and link to Finra's BrokerCheck, the regulator's search engine tool for investors.

In compliance with the Financial Industry Regulatory Authority Rule 2210, firms' first pages of their websites and any page with professionals' profiles must include a link that goes directly to the BrokerCheck homepage, where investors can search for firm and adviser backgrounds. Advisers and firms can also include a link that goes directly to their profiles, but that isn't required.

"If people did more comparison shopping up front they would have better results," said Lora Hoff, a financial adviser in Dallas who has the BrokerCheck button on all pages of her website. "Unfortunately, there are people less trustworthy in the industry."

On its website, Finra offers advisers guidelines on how to comply with this rule.

Regulators are ramping up efforts to connect investors with professionals they can trust. Last year, Finra launched an ad campaign to promote BrokerCheck. The Securities and Exchange Commission also redesigned its public disclosure website for easier background checks. Meanwhile, the Department of Labor has released its controversial fiduciary rule, which requires all advisers to act in their clients' best interests on retirement accounts. When the rule was gaining momentum last year, the DOL rolled out videos for investors with a clear message: clients may need to reevaluate their financial advisers.

The public used BrokerCheck to conduct 71 million reviews of broker or firm records in 2015, a Finra spokeswoman said.

But the financial industry is pushing back on all fronts. Danny Sarch, founder and owner of Leitner Sarch Consultants, a wealth management recruiting firm in White Plains, N.Y., recently wrote a column saying Finra needs to fix BrokerCheck. He claims that while the website provides access to up-to-date and accurate information, it also publishes accusations, "convenient settlements" and old misdemeanors.

"Finra is interested in providing as much information as possible to investors," said Brian L. Rubin, a partner at Sutherland Asbill & Brennan in Washington, D.C. "A criticism from the industry is that the information is sometimes wrong or imperfect, and I think Finra is trying to work with the industry to provide better data."

A report by the Securities Litigation and Consulting Group released in April said Finra's tool is not very valuable for investors. It cited other research reports that highlight broker misconduct.

"We find that the BrokerCheck data does not help investors protect themselves because BrokerCheck cannot, in its current hobbled form, be used to discern good brokers from bad brokers," it stated.

Ms. Hoff said regulators are just trying to weed out the bad apples.

"Fortunately, there is still a majority of good brokers out there," she said. "Investors should just be cautious."


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