No Recovery, No Fee

424-835-5733 | 310-525-3516

You may have lost money in your investment portfolio,
due to mismanagement and not even know it.

Check up on your financial adviser: you might be surprised

"The numbers speak for themselves," says a university finance professor and co-author of a study focused upon misconduct in the financial advising and brokerage industry.

Boy, they surely do, and what they have to say is truly troublesome.

The referenced study could quite plausibly be entitled "Talk about a Forgiving Industry."

Here's why, as noted by a media account discussing its findings. That article states that "almost half of the financial advisors fired for misconduct wind up getting similar jobs in the industry."

And that isn't really the whole story. The study researchers say that about half of all brokers who commit some client-related act of impropriety -- for example, investing inappropriately, hiding material facts that a client should know, making material misrepresentations about an investment and so forth -- are never caught and punished at all. That actually means that about 75 percent of financial pros with what the above-cited article calls "blemished records" are still employed in their industry.

That should engender goose bumps in more than a few investors and readers of this blog and instantly conjure up this reminder: caveat emptor.

The study's conclusions are based on far more than anecdotal or other casually derived evidence. In fact, the authors delved into the personal records of more than 600,000 working advisers and brokers who are registered in the national database maintained by the Financial Industry Regulatory Authority, which oversees brokers across the country.

One notable fact that the findings clearly reveal is that, while financial firms and brokerage houses themselves seem to generally take discipline quite seriously as applied to wrongdoers, the larger industry as a whole is far less focused on weeding out bad actors.

There is an obvious lesson to be learned for any reader perusing the study conclusions, namely this: Check out your broker.

No Comments

Leave a comment
Comment Information

Our Office Location

The Law Offices of Marc I. Zussman
433 N. Camden Drive
Suite 730 
Beverly Hills, CA 90210       
Map & Directions

Local: 424-835-5733
Local: 310-525-3516
Toll Free: 866-451-2517
Fax: 310-525-3528