Why You Need to Do a Background Check on Any Financial Adviser

If someone is going to help steward your life savings, they should welcome scrutiny. At GDS, we encourage every investor to verify before hiring. A background check takes minutes, costs nothing, and can help you avoid potential issues.  

The Two Free Databases Every Investor Should Use 

Think of your background check as a two-stop process. The first stop is FINRA BrokerCheck, which lets you look up brokers and brokerage firms. You’ll see exam results, employment history, and whether there have been any disputes or regulatory actions. 

The second stop is the SEC’s IAPD site, short for Investment Adviser Public Disclosure. This is where you’ll find an adviser’s Form ADV, the plain-English brochure that spells out their services, fees, and conflicts, and their Form CRS, which summarizes the relationship you can expect. The two systems are connected, so even if you start in one place, you can be directed to the other. 

And don’t forget: your state securities regulator is also there to help. Through the NASAA directory, you can quickly connect with them if you have questions or concerns. 

How to Run a Fast, Thorough Background Check in 10–15 Minutes (Bookmark This for Later) 

1. Confirm registration. Search the person and their firm on both BrokerCheck and IAPD. No current registration? That’s a stop sign. 
2. Check for disclosures. Review customer disputes, regulatory actions, terminations, bankruptcies, or criminal matters. One dated item is different from a pattern, so read the context. 
3. Open Form ADV & Form CRS. These must match what you were told. At GDS, ours are posted publicly for transparency: 
   Form ADV Part 2 (2025) 
   Form CRS (2025) 
4. Verify custody and statements. You should get statements directly from a qualified independent custodian (such as Schwab or Raymond James), not just from the adviser. 
5. Check titles and credentials. “Adviser” is just a title. Confirm true designations like CFP® or CEPA® and cross-check them. 
6. Understand pay models. Ask exactly how they’re compensated. Then confirm it matches what’s in the ADV. 
7. Trust your gut. If answers get vague or too complex, pause and keep interviewing. 

Red Flags That Deserve a Closer Look 

As you go through this process, a few warning signs should make you stop and think. If the adviser is the only one providing your statements, that’s a red flag. Promises of “guaranteed” or perfectly smooth returns should also trigger skepticism, markets simply don’t work that way. Multiple or recent regulatory disclosures are another area where caution is warranted, especially if the adviser can’t explain them clearly. And any pressure to move quickly, or requests for broad withdrawal authority or power of attorney, should be taken seriously. These are signals that you may need to step back and reconsider. 

What to Do If Something Feels Off 

Trusting your instincts is part of protecting your finances. If something doesn’t feel right, don’t ignore it. Call the custodian holding your assets and ask them to freeze suspicious activity. If necessary, you can initiate an ACAT (Automated Customer Account Transfer) to move your money to another custodian or adviser. At the same time, report your concerns to the SEC or FINRA, and reach out to your state securities regulator for additional guidance. And if the issue looks serious, consulting a securities attorney can provide extra protection. Keeping a record of emails, contracts, and statements will only strengthen your position if things escalate. 

How GDS Makes Verification Easy 

We encourage background checks, not just on other advisers, but on us too. That’s why we keep our regulatory filings available to the public, use independent custodians who send you statements directly, and explain our fees and conflicts up front. Transparency is a core part of how we serve clients.

Final Thoughts 

Choosing a financial adviser is ultimately about trust, transparency, and partnership. Always verify before you hire. And if you’d like a second set of eyes on an adviser’s record, we’re happy to sit down with you, walk through it in plain English, and answer your questions, so you can make an informed decision with confidence. Give us a call at (469) 212-8072 or schedule a conversation with GDS today.  

GDS Wealth Management (“GDS”) is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. This blog is for informational purposes only and should not be taken as investment advice, a solicitation, or a recommendation to buy or sell securities. Investing involves risk, including possible loss of principal. Past performance is not a guarantee of future results. Our services, fees, and conflicts of interest are described in our Form ADV Part 2A and Form CRS, available on the SEC’s IAPD website and upon request. References to BrokerCheck, the SEC’s IAPD site, NASAA, or custodians such as Schwab or Raymond James are provided for illustrative purposes only. GDS is not affiliated with these organizations, and their mention should not be viewed as an endorsement. Professional credentials (e.g., CFP®, CEPA®) are issued by independent organizations and do not guarantee performance or future results. Contacting GDS or scheduling a meeting does not create an advisory relationship, and there is no obligation to become a client.