Wondering How Your Financial Advisors Rank for Misconduct? There’s a Web App for That

A new site created by ProMarket board member Amit Seru (Stanford) and co-authors Mark Egan (Harvard) and Gregor Matvos (UT Austin) offers free data and analysis on the financial advisory industry, including rankings for each firm, county, and state in terms of financial adviser misconduct.

 

 

After the far-reaching media buzz caused last year by Stigler Center Working Paper No. 1 on the job market for financial advisors with a history of professional misconduct, the authors are back with a user-friendly new resource for anyone who wants to know more. ProMarket board member Amit Seru of Stanford and co-authors Mark Egan of Harvard and Gregor Matvos at UT Austin have now made the data from their groundbreaking research publicly available.

 

EganMatvosSeru.com is a free resource created for anyone interested in the financial advisory industry—from policymakers and academics to journalists or members of the 56 percent of American households who have sought advice from a financial advisor. The site offers free data and analysis on the industry, including, for example, rankings for each firm, county, and state in terms of financial adviser misconduct. Egan, Matvos, and Seru have also constructed a new Investment Adviser Dataset from public records that’s now available for free from their site. The Investment Adviser dataset includes the employment and disclosure history for 462,000 investment advisers over the period 2005–15.

 

The much-publicized paper that inspired the launch of the web app provided the first country-wide look at how prevalent misconduct is among financial advisors in the United States and how advisors’ careers progress in the aftermath of episodes of misconduct. They found that some 7 percent of the advisors in their sample (which covered some 10 percent of all employees in finance and insurance) have records of misconduct, and a third of those are repeat offenders. And although around half of advisors lose their jobs after episodes of misconduct, some 44 percent of offenders are able to find new jobs within the same industry within a year—typically in firms that have higher-than-average rates of misconduct themselves. The result is an uneven geographical and firm-level concentration of misconduct, with up to 15 percent of advisors in some of the largest firms having misconduct records. Counties with lower education levels, large elderly populations, and high incomes are more likely to be home to firms with poor misconduct records.

 

Check out how your state, county, or advisory firm ranks for financial misconduct here.

 

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