Do CFP® professionals engage in less misconduct? Exploring the importance of job classification when comparing misconduct rates among financial service professionals. Issue 21 (15th December 2021)

• Record Type: Journal Article
• Authors: Tharp, Derek T.; Camarda, Jeffrey; Lee, Steven James; de Jong, Pieter J.
• Is Part Of: Applied economics letters. Volume 28:Issue 21(2021)
• Page Start: 1830
• Page End: 1835
• Publication Date: 2021-12-15
• Subjects: Financial advisors -- misconduct -- FINRA -- SEC; G23 -- D18; Economics -- Periodicals; Economics, Mathematical -- Periodicals; 330
• DOI: 10.1080/13504851.2020.1854441
• Languages: English
• ISSNs: 1350-4851

Abstract

ABSTRACT: Using a unique dataset of FINRA-licenced individuals in Florida in 2015 that was enriched to include job classification information generally not contained in publicly-available regulatory data, a series of binary logistic regressions illustrate how unobserved differences among financial service professional roles may bias results in misconduct analyses. When using CFP® status as the sole predictor of misconduct among the full sample of licenced individuals, CFP® professionals are found to have 1.86 times higher odds of having engaged in culpable advisory-related misconduct compared to non-CFP® professionals. However, after controlling for other relevant factors and limiting the sample to only individuals identified as financial advisors, CFP® professionals are found to have 0.84 times lower odds of having engaged in culpable advisory-related misconduct. Because job classifications are generally not available in the standard SEC and FINRA datasets, these findings illustrate how the inability to control for unobserved differences in job roles may bias misconduct analyses.