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Chapter 2: Regulations

Chapter 1: Kinds of Advisors

Who Regulates Whom?

Insurance advisors are regulated by the State Department of Insurance.

Commission-based advisors are regulated by FINRA (Financial Industry Regulatory Authority)

Fee-based advisors are regulated by the SEC (the Securities and Exchange Commission).

Do Your Homework!

How do you know which license an advisor has obtained? There are a few ways to check. Let’s take a look at the process using Steven Van Metre as an example. Does he have an insurance license? Is he a commission-based broker? Or a fee-based advisor?

Looking up an Insurance Advisor

Insurance advisors are regulated by the State Department of Insurance so you must know the advisor’s state of residence. Steve is licensed in the State of California.

Does Steve have an insurance license in the State of California? Go to your state’s website for insurance, www.insurance.ca.gov in this example, to find out.

  • Click on the Consumers tab, located across the top of the page.
  • Find and click the Check License Status link in the drop-down menu (note: this may vary from state to state, but should be similar).
  • You can now search for the advisor by License Number or by conducting a Name Search.
  • Input Steve’s license number 0D45202 and click Submit Query.

This brings up a page titled Individual License Details. Here you can:

  • Learn the status of an advisor’s license
  • Learn when an advisor’s license expires
  • View the advisor’s infractions or complaints
  • Learn about the advisor’s Company Appointments (see next section)

Captive Advisors vs. Brokers

Captive advisors are generally associated with only one or two appointments. However, brokers tend to be associated with several appointments, or companies. This is important to understand when hiring an advisor.

Bottom Line: The more appointments associated with an advisor, the more options you will have to choose from to meet your desired investment needs.

Looking up Commission-Based Advisors

Commission-based advisors are regulated by FINRA. Go to FINRA’s website at www.brokercheck.finra.org

  • Type in the name of the advisor in the box titled Individual (Van Metre in our example)
  • Type in the advisor’s location (city or zip code, Bakersfield or 93309 in our example)
  • Click Search

Once the advisor’s name is displayed, click on More Details to learn about the advisor’s status.

Note: Steve does not currently hold a commission-based licensed. Therefore, you will be given a choice to either:

  • Stay on BrokerCheck (which allows you to search for past licenses held by an advisor, or search for another advisor’s information) – OR
  • Go to the SEC Site > (which allows you to look up fee-based advisors)

Looking up Fee-Based Advisors

Fee-based advisors are regulated by the SEC (the Securities and Exchange Commission). Go to www.adviserinfo.sec.gov or simply do an internet search for Investment Adviser Public Disclosure in order to get there.

  •  Type in the name of the advisor in the box titled Individual (Van Metre in our example)
  • Type in the advisor’s location (city or zip code, Bakersfield or 93309 in our example)
  • Click Search

Once the advisor’s name is displayed, click on More Details to learn about the advisor’s status.

Chapter 3: Fiduciary