FINRA’s BrokerCheck Rule: How Will It Affect Advisors?

FINRAOn April 30, 2014, in an effort to drive more traffic to BrokerCheck and make investors aware of the information included in BrokerCheck, FINRA re-proposed a rule that would require advisors and firms to include a hyperlink to BrokerCheck in their online communications and websites. This is the second version of a proposal from last year; the new proposal is significantly improved in a variety of ways.

This revised proposal would require firms to include a clear link to BrokerCheck on their website. From there, investors can search BrokerCheck to find a specific advisor’s report. This would go into effect as soon as the rule is finalized, meaning advisors would have to post the link on their website and other digital platforms (including some social media sites, such as LinkedIn) in a clearly visible manner.

For advisors, the main effect will be an increased focus on their BrokerCheck records (including the disclosures within that record) for prospective and current clients, as they will be required to link to the site anywhere they have an online presence. The requirement will also apply to any registered staff employed by advisors.

Although the new proposal is a significant improvement, firms may face significant challenges to comply with the certain aspects of the requirements, particularly for social media sites. Firms do not have a way to automate or “push” this change to advisor’s social media accounts, though they will be required to comply with these requirements on social media sites and create controls and procedures to ensure that the requirements of the rule are being complied with on advisors’ social media accounts.

We applaud FINRA for revising this rule in a logical way, and look forward to working with them on this going forward.


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