Does Your Advisor Have a Record and You Don’t Know It?

Does Your Advisor Have a Record and You Don't Know It?Does Your Advisor Have a Record and You Don’t Know It?

Researchers at discovered a disturbing trend with financial advisors. The study focused on advisors who were fired for misconduct. Now, misconduct would be violating security rules in some way or another. Said another way, misconduct suggests something unethical took place. The study showed that almost half of the fired advisors were back advising clients within a year of termination.

Then researchers at the University of Chicago also had some further disturbing findings.  They found that almost 8% of the 650,000 advisors that are registered with FINRA have something troubling on their record. That could range from regulatory judgements to civil and criminal judgments.  

The report also shows that over a third of the cases involve repeat offenders.

So should this matter to you? I would suggest that it should matter and here is why. There is a tremendous amount of trust involved in client and financial advisor relationships. As a client, you depend on advice given that is in your best interest and not the interest of the advisor. Unethical behavior in the least or breaking security law in the worst suggests that there could be a high probability that the advisor might not always be acting in the client’s best interest. Further, the study also suggest that advisors with a history of misconduct are 5 times more likely to do something unethical again.

Trust is a valuable commodity in a business where commissions are involved. Clients should be running a simple background check on their advisors. All you have to do is go to and put in your advisors name. You will get a full look at their history in the business.

So what if you find something? This is where you need to have a serious conversation and decide how to proceed. Always give the benefit of the doubt. Most importantly, stay commited to that relationship only if you can get to a place of peace about your advisor’s past.


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