Financial Advisor Misconduct Study (it’s quite stunning)
Before I get into newsletter, I wanted to remind readers of the following:
-Last week’s newsletter titled: AXA Hit with Class Action Lawsuit Over COI Increase. Click on the following to read: https://strategicmp.net/axa-class-action-lawsuit
I ran across the most interesting/enlightening/depressing financial advisor misconduct study the other day and I knew instantly I had to put it out in a newsletter. This study is right up my alley and I’ll be using some of the statistics when I do the re-write of my book Bad Advisors: How to Identify Them: How to Avoid Them (click here to learn more about this book).
To download this 20-page study in PDF (no sign up form required), click on the following link:
http://www.thewpi.org/pdf_files/misconduct.study.pdf
Let me preface this newsletter by saying that the study is super detailed. The way they calculated the numbers is not only over my head, but it’s way over my head. The good news is that the authors did a nice job of summarizing their results and so the study still makes for a good read.
For this newsletter, I’m simply going to point out a few things I find interesting from the study. If you think they are interesting, then you should download the study to learn more (FYI, I highlighted the Study to help readers flip through it quickly).
Interesting Data:
- 7% of financial planners have misconduct records (crazy it’s that high).
- 1 in 13 financial advisors have a misconduct-related disclosure on their record.
- Approximately one-third of advisors with misconduct records are repeat offenders.
- 44% of those who lose their job due to misconduct are re-employed in the industry within a year (wow!).
- Data indicated that advisors seem to target older, wealthier, but more uneducated clients.
- Firms with the highest percentage of advisors with reported misconduct (this is truly stunning):
1 Oppenheimer & Co. 19.60%
2 First Allied Securities 17.72%
3 Wells Fargo Advisers FN 15.30%
4 UBS Financial Services 15.14%
5 Cetara Advisors 14.39%
6 Securities America 14.30%
7 National Planning Corp. 14.03%
8 Raymond James 13.74%
- More than 1 in 7 financial advisors at Oppenheimer & Co., Wells Fargo Advisors Financial Network, and First Allied Securities have engaged in misconduct in their past.
- Misconduct is more common among firms that advise retail investors.
- Interestingly, the vast majority of annuity disputes are related to variable rather than fixed rate annuities.
The above data is just a small part of the study. If consumers read this study, it would be tough for them to trust an advisor.
What the study tells me is that the industry does a LOUSY job of cleaning its own house. Why do repeat offenders continue to be able to find jobs? I imagine greed is the answer (greed of the firms that hire them).
After reading the report I felt like I needed to take a shower. It really disgusted me. Feel free to email me with what you think after you read the report.
Roccy DeFrancesco, JD
Founder, The Wealth Preservation Institute
144 Grand Blvd
Benton Harbor, MI 49022
269-216-9978
