Almost half of the financial advisors fired for misconduct wind up getting similar jobs in the industry, a university research paper has found.
About 44 percent of advisors who leave a financial services job following disciplinary action for misconduct are hired by another firm within a year, according to the study by University of Chicago and University of Minnesota business school professors. The researchers refer to advisors regulated by the Financial Industry Regulatory Authority, the industry's self-regulatory organization overseeing broker-dealers and brokerage firms.
"The numbers speak for themselves," said study co-author Mark Egan, assistant professor of finance at the University of Minnesota's Carlson School of Management. "Firms discipline misconduct severely, but the industry as a whole undoes that discipline, at least partially."
Since about half of advisors don't actually lose their job after misconduct, nearly 3 in 4 professionals with blemished records are still active after a year, Egan said.