An eye opening report titled, “The Market for Financial Adviser Misconduct”.was recently released by three professors with the University School of Chicago – Booth School of Business and the University of Minnesota – Carlson School of Management.
The provocative 61 page study mentions several disturbing patterns regarding predatory practices including this quote, “…differences in consumer sophistication may be partially responsible for this phenomenon: misconduct is concentrated in firms with retail customers and in counties with low education, elderly populations, and high incomes. Our findings suggest that some firms "specialize" in misconduct and cater to unsophisticated consumers, while others use their reputation to attract sophisticated consumers”.
Other disturbing statistics mentioned in the report are that: 44% of advisers that lose their job due to documented misconduct are re-employed by either the same firm or within the industry – usually within a year. About 30% of offending advisers are considered “repeat offenders”. Firms with the highest percentage of advisers practicing financial fraud and misconduct are:
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%
The most important aspect and foundation of financial planning and advice is trust. Legacy Care Planning works closely with families and professionals to review legal and financial planning procedures in order to protect elderly family members from the risk of financial exploitation and predatory practices. Go to http://www.legacycareplanning.com/ to find out more.
The complete 61 page report, “The Market for Financial Adviser Misconduct” may be found here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2739170