There’s a phrase no one wants to read in a sweeping report about the financial advisers who handle their savings: economy-wide misconduct.
A new working paper by business school professors at the University of Chicago and University of Minnesota found that 7% of financial advisers have been disciplined for misconduct that ranges from putting clients in unsuitable investments to trading on client accounts without permission. That’s a troubling mark for an industry that relies on the trust of clients. And some large, well-regarded firms have misconduct records that far exceed the average. Nearly 20% of financial advisers at Oppenheimer & Co., with more than 2,000 advisers counted in the study, have misconduct records, according to the new paper.
“It’s everywhere, not just small firms. It is pervasive,” said Amit Seru, a finance professor at the University of Chicago’s Booth School of Business and a co-author of “The Market…