Before choosing a financial advisor or purchasing an investment, it is important to do a background check. Checking registration helps to protect investors because it confirms if the person or firm you are working with can sell investments or offer investment advice.
To check whether the financial advisor you are considering working with is registered, go to the National Registration Search webpage on the Canadian Securities Administrators (CSA) website. The National Registration Search contains the names of all registrants (individuals and firms) in Canada, and the CSA provides a guide to understanding registration.
A search query will determine whether the individual or firm in question is ‘active’, ‘historical’, or ‘suspended’.
- An ‘active’ status means that the individual or firm is registered to trade in or advise on securities.
- A ‘suspended’ status means that the person may have been subject to regulatory action, that their registration is being terminated in one or more categories, that a required fee has not been paid, or that the person has surrendered their registration.
- A ‘historical’ status means that the individual or firm was previously active in trading in or advising on securities, but is no longer registered.
After checking registration, it is a good idea to determine whether the advisor you are considering has any disciplinary history. You can use the CSA’s Disciplined Persons List to find out whether the advisor in question has ever been reprimanded. In addition, check the cease trade orders database to see if an order has been issued against a firm or individual.
The Disciplined Persons List contains the names of those who have been subject to sanctions by a Canadian securities regulator, the Investment Industry Regulatory Organization of Canada (IIROC) or the Mutual Fund Dealers Association of Canada (MFDA). The list contains anyone who has been subject to sanctions, no matter how serious.
Another good practice is to search the internet for the advisor’s name. Pay close attention to any complaints, wrongdoings, or bad practices that you may want to investigate or ask questions about.