TY - UNPB
T1 - Is public distrust of the finance sector warranted? Evidence from the extent of financial adviser misconduct
AU - Aliyev, Nihad
AU - Allahverdiyeva, Inji
AU - Putniņš, Tālis J.
PY - 2023
Y1 - 2023
N2 - Financial advisers are the primary interface between the public and the finance sector. Using data from over one million financial advisers in the U.S. since 1900, we find that 30% of advisers are involved in misconduct, but only about one-third of those advisers are reported by regulators. We estimate that advisers involved in misconduct currently oversee around $6.9 trillion assets under management. The shares of adviser misconduct and unreported misconduct increase during the GFC, paralleling the erosion of trust in financial institutions. Our findings suggest that public distrust of the finance sector is warranted.
AB - Financial advisers are the primary interface between the public and the finance sector. Using data from over one million financial advisers in the U.S. since 1900, we find that 30% of advisers are involved in misconduct, but only about one-third of those advisers are reported by regulators. We estimate that advisers involved in misconduct currently oversee around $6.9 trillion assets under management. The shares of adviser misconduct and unreported misconduct increase during the GFC, paralleling the erosion of trust in financial institutions. Our findings suggest that public distrust of the finance sector is warranted.
KW - Trust
KW - financial advisers
KW - financial misconduct
KW - consumer finance
U2 - 10.2139/ssrn.4296833
DO - 10.2139/ssrn.4296833
M3 - Preprint
T3 - SSRN
BT - Is public distrust of the finance sector warranted? Evidence from the extent of financial adviser misconduct
PB - SSRN
ER -