Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Study Examines Extent of Financial Advisor Misconduct
Old 03-02-2016, 10:55 AM   #1
Recycles dryer sheets
jdmorton's Avatar
 
Join Date: Mar 2005
Posts: 156
Study Examines Extent of Financial Advisor Misconduct

I find this study - published February 26, 2016 - pretty amazing and disturbing. Three individuals at the University of Chicago state in the study they examined the available information on financial advisor misconduct and fraud for the approximately 1.2 million registered financial advisors in the U.S. between 2005 and 2015. According to authors, this represents only 10% of all employment in the financial and insurance industry.

Below you will find the first six sentences from their conclusion:

"We document substantial misconduct among United States advisors. More than 12% of financial advisors have a disclosure on their record, and approximately 7% have been disciplined for misconduct and/or fraud. The costs of misconduct are not small: the median settlement amount is $40,000. Misconduct varies dramatically across advisors and firms, and repeat offenders are common. Although advisors face consequences for misconduct, the majority of advisors remain in the industry following misconduct. More than 50% remain with the same firm after a year, and 20% switch to a different firm in the industry."

The study also lists the financial firms with the most and least advisors with reported misconduct, based on percent of their total number of advisors. The paper only lists the 10 most and least firms with reported misconduct, not all firms studied.

Here is the link to the study: The Market for Financial Adviser Misconduct by Mark Egan, Gregor Matvos, Amit Seru :: SSRN

There is an active discussion on this study at bogleheads.org as well.
__________________

__________________
Well, Helen; shall we just go home?
jdmorton is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-02-2016, 11:10 AM   #2
Full time employment: Posting here.
 
Join Date: Apr 2015
Posts: 903
Honestly, this is why I find it easier to DIY finances. You'd still need to do your research so you can find an advisor that wouldn't screw you over. By that point, then you likely already have the knowledge to DIY and can avoid paying the FA/CFP 1-2% of assets per year.
__________________

__________________
hnzw_rui is offline   Reply With Quote
Old 03-02-2016, 11:16 AM   #3
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Is this study a surprise to anyone ?

Change the name "Financial advisor" to salesman to understand their motivations better.
__________________
MasterBlaster is offline   Reply With Quote
Old 03-02-2016, 01:22 PM   #4
Moderator
MBAustin's Avatar
 
Join Date: Jul 2010
Posts: 4,162
"44% of advisers who lost their job after misconduct found employment in the industry within a year." Yikes!

Good article, thanks.
__________________
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
----------------------------------
ER'd Oct. 2010 at 53. Life is good.
MBAustin is offline   Reply With Quote
Old 03-02-2016, 01:31 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 8,620
And those are just the ones who got caught.
__________________
braumeister is offline   Reply With Quote
Old 03-03-2016, 01:47 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Feb 2013
Location: Toronto
Posts: 1,417
Quote:
Originally Posted by MasterBlaster View Post
Is this study a surprise to anyone ?

Change the name "Financial advisor" to salesman to understand their motivations better.
Misconduct in the financial industry. Impossible. These people should totally be able to self-regulate. I'm sure it was all just a big misunderstanding!
__________________
6miths is offline   Reply With Quote
Old 03-03-2016, 02:46 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,626
I wonder if any of the do-it-yourself investors ever get caught for misconduct?

I'm sure some DIY folks are guilty of fraud and misconduct with their portfolios, too.
__________________
LOL! is offline   Reply With Quote
Old 03-03-2016, 05:17 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 9,899
Would you live in the same neighborhood as a registered financial adviser?
__________________
Yes, I have achieved work / life balance.
travelover is offline   Reply With Quote
Old 03-03-2016, 05:21 PM   #9
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 16,571
__________________
I heard the call to do nothing. So I answered it.
Walt34 is offline   Reply With Quote
Old 03-03-2016, 07:44 PM   #10
Thinks s/he gets paid by the post
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 4,616
Today: Elizabeth Warren ... FINRA... Senate Hearing

Elizabeth Warren: Bad Behavior Is Still Too Common Among Financial Advisors - The Atlantic

To the woodshed...
__________________

__________________
imoldernu is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
advisor or no advisor frank FIRE and Money 10 04-29-2014 07:58 AM
"Brain study examines submariners in training" Nords Other topics 5 08-01-2011 05:04 PM
Thousands of teachers cited for sex misconduct Wags Other topics 15 10-22-2007 09:22 AM
Financial Advisor (CFP) Horror Story intercst FIRE and Money 7 07-28-2005 05:55 PM
terminating Financial Advisor (DFA) oldcrowcall FIRE and Money 4 05-02-2004 03:43 PM

 

 
All times are GMT -6. The time now is 06:03 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.