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

Question: My partner and I have engaged the services of a financial planner. We are in the very early stages of setting things up, and they have requested verified copies of our passports and licenses. Is this a standard part of setting up a financial plan? What personal information do planners typically ask for, and could this be an indication they’re scamming us? (Looking for a new financial adviser? This tool can help match you with an adviser who might meet your needs.)

Answer: This is such a great question, and one that many people might just assume is necessary, leading them to hand over their most personal information to a virtual stranger. 

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

But, that doesn’t mean you need to provide all of your information. Typically, financial planners will ask for a driver’s license to verify and satisfy their KYC requirements. “Asking for a passport seems a little overly thorough, and you could ask if just providing copies of driver’s licenses is enough to satisfy their requirements. Also, if you’re not setting up financial accounts or hiring them for investment management, there is no reason they should ever ask for your Social Security number,” says Paddock.

Have an issue with your financial adviser or lookign to hire a new one? Email [email protected].

Danielle Miura, certified financial planner at Spark Financials, says in her experience, she’s heard of financial planners asking for licenses but not passports. “Usually, gathering documents is a step in creating a financial plan. If you feel uneasy about providing your passport information, ask your financial adviser why they need this personal information,” says Miura. (Looking for a new financial adviser? This tool can help match you with an adviser who might meet your needs.)

If you’re still worried that you’re being scammed, Miura recommends doing some research about 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 to ask before vetting a financial adviser, and this one will provide additional tips for vetting the adviser.

Still feeling uncertain about what documents you should readily hand over to a potential adviser? The CFP Board’s consumer website, Let’s Make a Plan, has a page dedicated to queries like these, called Checklist For Your First Visit with a Financial Planner.

Have an issue with your financial adviser or lookign to hire a new one? Email [email protected].