Before depositing money or sharing sensitive information, verify the investment firm and the person offering the service, confirm that you are communicating through an authentic channel, and read the documents that explain fees, conflicts, and account terms. These checks can help you spot warning signs; they cannot eliminate investment risk or guarantee that a particular platform is right for you.
This guide focuses on U.S. investment accounts. Rules and protections depend on the product and jurisdiction. If you are outside the United States, check with your own country’s financial regulator.
1. Identify the firm and professional in official databases
Start with the legal name of the company that will hold or manage the account, not just the platform’s brand or app name. Also identify the individual who is recommending investments or handling your account. Ask plainly: “Are you registered with the SEC, a state, or FINRA?” Then verify the answer yourself using official records.
- For investment advisers: Search the SEC and state regulator’s Investment Adviser Public Disclosure database (IAPD): adviserinfo.sec.gov. Review the firm and relevant individual adviser records, registration status, employment history, and disclosures.
- For brokers and brokerage firms: Search FINRA BrokerCheck: brokercheck.finra.org. Review the broker and firm records, including background, registration, employment, customer disputes, and regulatory or disciplinary disclosures.
- For futures or commodities activity: Check the National Futures Association’s BASIC database and CFTC disciplinary-history resources, as relevant to the service being offered: NFA BASIC and CFTC Disciplinary History.
Search prior names and firm histories when available, and check both the person and the company. State securities regulators may have additional information. A filing or document someone sends you is not proof of registration: the SEC warns that scammers may use filings to falsely claim legitimacy. Verify status in the relevant official database rather than relying on a screenshot, certificate, or link supplied by a solicitor.
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2. Confirm that the website, app, or person contacting you is genuine
A legitimate firm can be impersonated. A real registration record does not prove that a particular caller, text, social-media account, website, or app belongs to that firm. Do not use contact details from an unsolicited message to verify the sender.
- Find the firm independently through Investor.gov, the SEC’s investor-education site.
- Open the regulator-linked firm record and retrieve its Form CRS, where available.
- Use the contact information in that genuine disclosure to call or message the firm. Ask whether the person, account, app, or offer is actually associated with it.
- Before entering credentials or transferring funds, check that you are using the verified site or application and that the account and recipient details match the firm’s official instructions.
Do not assume a polished website, a familiar firm name, an app-store listing, or a small successful withdrawal proves that an offer or contact is authentic.
3. Read the documents that define the service
Use current official disclosures and account documents to understand what the provider does and what you agree to. Form CRS is a standardized starting point for comparing investment advisers and broker-dealers. Get it through the firm’s regulator-linked record, then read the account agreement and other applicable terms.
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For an investment adviser
Review the current Form ADV, especially Part 2, the narrative brochure. It explains the adviser’s services, fees, conflicts, and relevant disciplinary information. IAPD provides adviser filings and records: IAPD.
For a broker or brokerage account
Read Form CRS, the account agreement, and the brokerage firm’s relevant disclosures. Check what the firm will do, what decisions remain yours, and how the broker or firm is paid. BrokerCheck provides broker and firm records: BrokerCheck.
Do not treat “broker” and “investment adviser” as interchangeable labels. A broker may execute transactions and receive commissions or markups; an adviser may provide ongoing advice and charge an asset-based fee. Actual services and obligations depend on the relationship and its documents. Check whether the provider’s services, product range, or a professional’s credentials limit what can be recommended.
4. Compare the full cost and how the provider earns money
Ask, “How are you paid for your services?” Look beyond a headline commission or advertised account fee. Depending on the service, costs may include:
- Commissions, markups, or markdowns on transactions;
- Asset-based advisory charges;
- Account, custody, transfer, or other service fees;
- Transaction expenses; and
- Costs embedded in the investments themselves.
Ask what conflicts may arise from those payments—for example, whether compensation differs depending on which product or investment is used. If an adviser charges a percentage of assets, convert that percentage to dollars using the balance you expect to invest. Compare the total cost with the service, product limitations, and support you will receive; a lower quoted fee does not necessarily mean the same service.
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5. Compare platforms on the same basis
If you are weighing two or more services, use each firm’s current Form CRS as a common starting point. Then check Form ADV or account terms where relevant. Record the answers side by side:
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| What to compare | Questions to answer |
|---|---|
| Role and service | Is it execution-only brokerage, recommendations, ongoing advice, financial planning, or a limited product range? |
| Firm and professional | Are both the firm and the relevant person properly registered for the service? What background or disciplinary disclosures appear? |
| Fees and revenue | What are the direct and investment-level costs? How does the firm and representative earn money? |
| Conflicts and limits | What incentives or conflicts are disclosed? Are products or recommendations restricted? |
| Custody and protection | Which firm holds the assets? Is there a separate clearing firm, and what protections apply to each? |
| Terms and support | What do the agreement say about withdrawals and account operations? Have you independently verified official support contacts? |
A comparison is useful only when the services and account types are comparable. Differences in fees may reflect differences in what the provider does or what investments and support are available.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.6. Understand custody protection—and what it does not cover
If the account is a brokerage account, ask which brokerage firm and clearing firm hold or process the assets. Confirm whether both are SIPC members using SIPC’s own resources: SIPC’s investor FAQs. Do not infer coverage from a platform’s branding alone.
SIPC protection is limited and concerns certain customer losses if a brokerage firm fails. Investor.gov’s Ask and Check guidance says SIPC “does not insure against losses attributable to a decline in the market value of your securities”: Ask and Check. Membership is not a promise of investment returns, and it does not make an investment risk-free.
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7. Pause when an offer uses pressure or promises too much
Stop and verify independently if you encounter any of these warning signs:
- Promises of unusually high or “guaranteed” returns with little or no risk;
- Pressure to act immediately or keep the opportunity secret;
- An unsolicited investment offer or a contact you cannot verify through the firm’s official details;
- Requests to pay through suspicious or difficult-to-reverse methods; or
- Demands for extra money, taxes, or fees to release a withdrawal.
Investor.gov states: “There is no such thing as high guaranteed investment returns, and every investment involves risk.” Read its fraud-prevention guidance at Investor.gov’s How to Avoid Fraud. A convincing app, genuine firm name, testimonial, or initial withdrawal is not enough to establish that the investment or contact is legitimate.
If you suspect a securities scam, stop sending money and do not share credentials. Investor.gov provides SEC reporting and help resources, and you can also contact your state securities regulator: Investor.gov contact and help resources.
8. Keep checking after the account is open
Due diligence continues once you fund an account. Review statements and trade confirmations promptly, verify transactions, and contact the firm through a verified channel about anything you do not recognize. Watch for unauthorized changes to your address, phone number, email, account details, or linked bank information. Raise discrepancies promptly and keep copies of relevant statements, messages, and written responses.
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