‘Could this be an indication they’re scamming us?’ Our financial adviser requested copies of our passport and licenses. Should we be wary?

Is your financial advisor asking too much of you?

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Question: My partner and I have engaged the services of a financial planner. We are at a very early stage of setup and they have requested certified copies of our passports and licenses. Is this a standard part of creating a financial plan? What personal information do planners typically ask for, and could this be an indication that they are cheating on us? (Looking for a new financial advisor? This tool can help you find an advisor that fits your needs.)

Answers: This is such a great question, and one that many people just assume is necessary, leading to them giving out their most personal information to a virtual stranger.

First off, it’s important to understand that KYC, which stands for Know Your Customer, is an investment industry standard designed to ensure financial advisors can verify a client’s identity and a few other things. “So yes, verifying your identity and confirming that you are who you say you are is a standard part of working with a legitimate financial planner,” says board-certified financial planner Kaleb Paddock of Ten Talents Financial Planning.

However, this does not mean that you have to provide all of your information. Typically, financial planners require a driver’s license to verify and meet their KYC requirements. “Ask for a passport seems a little too thorough and you might ask if just providing copies of driver’s licenses is enough to meet their requirements. Even if you don’t set up financial accounts or hire them for investment management, there’s no reason they should ever ask for your social security number,” says Paddock.

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Danielle Miura, a certified financial planner at Spark Financials, says from her experience that she’s heard of financial planners asking for licenses but not passports. “Typically, gathering documents is a step in preparing a financial plan. If you’re uncomfortable providing your passport information, ask your financial advisor why they need that personal information,” says Miura. (Looking for a new financial advisor? This tool can help you find an advisor that fits your needs.)

If you’re still worried about being scammed, Miura recommends doing some research on the planner’s background. “Do a broker check on finra.org and learn more about their company and their designations,” says Miura. This guide will help you understand all the questions you need to ask before reviewing a financial advisor, and this guide provides additional tips for reviewing the advisor.

Are you still unsure which documents you should hand over to a potential consultant without further ado? The CFP Board’s consumer website, Let’s Make a Plan, has a page devoted to questions like these, entitled Checklist for Your First Visit to a Financial Planner.

Having a problem with your financial advisor or looking to hire a new one? Email [email protected]

The advice, recommendations or reviews in this article are those of MarketWatch Picks and have not been verified or endorsed by our trading partners.

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