Licensing, Registration
& Due Diligence

Licensing is permission to perform a regulated activity (like selling insurance or acting in a brokerage capacity). Registration is being listed with a regulator in a system that creates oversight and a public record. Credentials and designations can be useful, but they are not the same as licensing or registration. If you are unsure what applies, ask the professional to state their role and the regulator that oversees that role.

Use the SEC’s Investment Adviser Public Disclosure (IAPD) website to search for the person and firm and review their status and filings.

Use FINRA BrokerCheck to review a broker or firm’s profile, employment history, and disclosures (if any).

Form CRS is a short “relationship summary” designed to help consumers understand services, fees, and conflicts, and to compare firms. If you are evaluating a relationship that involves investment advice, ask for Form CRS and read it before agreeing to services.

Form ADV is part of the disclosure system for investment advisers. It can help you understand the adviser’s business, services, conflicts, and other required information. If someone is acting as an investment adviser, it is reasonable to ask where you can read their Form ADV.

A disclosure is an item a regulator requires to be reported, which could involve events like regulatory actions, customer disputes, or other reportable history depending on the role. A disclosure is not automatically disqualifying, but it is a signal to read carefully, understand timing and severity, and look for patterns.

“Financial advisor” is often used as a general marketing title. What matters is the person’s actual role (insurance agent, broker, investment adviser representative, or multiple). Ask which activities they are licensed or registered to perform and which regulator oversees those activities.

Try these:

1. “Are you acting as an investment adviser, a broker, an insurance agent, or more than one?”

2. “Are you affiliated with one firm or can you compare multiple providers?”

3. “What disclosures should I receive in writing before I decide?”

4. “How are you compensated for this recommendation?”

“Fiduciary” generally refers to a duty to act in a client’s best interest within the scope of the relationship. Whether and when it applies depends on the role and engagement. Ask the professional to explain, in writing if possible, the standard of care that applies to your relationship and to the specific recommendation.

Focus on process and documentation:

• Can they explain the goal, time horizon, and tradeoffs?

• Are they willing to show the documents that support the recommendation?

• Do they clearly separate guaranteed elements from assumed or projected elements?

• Do they give you time to review before making changes?

Common “pause and verify” red flags include:

• Pressure to act quickly

• Refusal to provide key documents

• Guarantees implied where outcomes depend on assumptions

• A recommendation to replace something you own without a written side-by-side comparison and rationale

Request:

• A side-by-side comparison of the old and new policy

• A written rationale (what problem is being solved)

• Any surrender charges or penalties you could face

• Any new underwriting requirements or time-based limitations that may apply

Then take time to review before signing.

An in-force illustration is a current projection based on the policy as it exists today, including current values and assumptions. It helps you see whether the policy is tracking close to expectations and what may happen under different assumptions. If you are getting a second opinion, ask for the full in-force illustration, not a summary.

Guaranteed values are based on contract guarantees. Non-guaranteed values are projections that depend on assumptions (like rates or costs). Projections can be helpful for planning, but they are not promises. A good review explains what must go right for projected results to occur.

Larger coverage amounts or more complex planning can trigger more underwriting review and documentation requests, including financial information and ownership paperwork. This is often about confirming suitability, financial justification, and consistent ownership and beneficiary setup.

For estate and tax-sensitive planning, a coordinated team approach is common:

• Estate planning attorney (structure and documents)

• CPA or tax advisor (tax implications and reporting)

• Insurance professional (implementation and servicing)

This helps prevent a plan that looks good on paper but breaks due to mismatched documents.

Ask for the exact legal name of the firm and the individual’s full name. Then search those names in IAPD and BrokerCheck. Pay attention to employment history, firm affiliations, and whether the person is currently active in the capacity being discussed.

Think of due diligence as normal consumer hygiene. You are not looking for perfection. You are looking for clarity, consistency, and documentation. If something is confusing, ask for written explanations, take a beat, and verify public records before committing to major financial changes.