Online Registries for Problem Wealth Advisers and Firms
Sometimes the federal government does a good job with online registries and lists … and some time it doesn’t. The Good: Product Recalls, Wanted Fugitives and Sex Offenders. The Bad: Problem Wealth Advisers and Flagged Investment Firms.
SEC Falls Short
But the SEC can’t adequately tell us which investment professionals and firms have misrepresented fees, sold unsuitable investments or committed forgery.
The Journal’s independent analysis said, “At least 1,300 brokerage and financial-advisory firms incorrectly stated on the new document that neither they nor their financial professionals had legal or disciplinary histories…”
That means about 20% of the approximately 6,200 firms in the analysis lied, saying they had no past problems, even though they did. The firms who slipped through the disclosure account for roughly 2,300 employees! That’s the number of potential bad actors floating around without a damning paper trail behind them and their infractions.
Dueling Government Forms and Search Databases
Remedy: A User-Based Rating Site
Without a viable government solution, where can consumers turn before entrusting their hard-earned investment dollars over to a financial adviser?
One solution is BankerAdvisor.com, a financial services research website and database. While its focus is primarily for B2B buyers of investment banking and commercial banking services, it includes a database of 6,000 investment management firms. The site relies on user submissions for ratings and reviews and has a detailed verification process.
BankerAdvisor founder Mike Casey, a CFO by training, said he initially created the site to help young entrepreneurs and business owners navigate the confusing world of investment banking. As he was building the sites databases, investment management seemed like a logical addition.
“Acquisitions, IPOs and exits are a natural circumstance of business owners working with investment banks,” Casey said. “A lot of these successful entrepreneurs are all of a sudden sitting on a pile of money, and they need help on where to park it and with whom. That’s part of why we added the investment management piece.”
Users can rate firms and advisers on a number of criteria. Casey said the heart of BankerAdvisor is to play matchmaker and not whistleblower. However, BankerAdvisor does give the opportunity for users to vent their frustration with fees, service and a number of other review and rating categories.
“The SEC, FINRA and others are rightly trying to out the bad actors. But what happens when a compliant doesn’t rise to a formal proceeding, sanction or action? Before BankerAdvisor you could take to social media, but no one wants to hear you bellyache on Facebook. This is a much better platform to provide your opinions, good and bad.”
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