In 2008, I worked for a broker dealer and the person running it decided to take everyone’s money and invest it into what he wanted to. He made questionable investment choices that angered a lot of investors and ended up leading his firm into bankruptcy.  

What was interesting however, is this man once helped many companies IPO and his investors make unrealistic returns on signature brands you would still recognize today, such as the IPO of Jack in the Box.  

However, since he had full control over the assets of his investors, when temptation drew upon him, he acted upon it for his own self-interest.  

While the regulating bodies took some disciplinary actions against him, what this experience taught me is that when money is involved, people can end up doing questionable things in life.  

Take that experience and combine it with seeing Bernie Madoff go through a trial for swindling investors in a Ponzi scheme, then hearing about more financial crimes throughout my life, it just became evident that something needed to be done about this.  

Not to mention, when I was younger, a meeting with a “financial advisor” somehow ended up becoming a life insurance meeting where I was pitched a plan that would not have been sustainable for my own personal financial situation, and would have led me to defaulting on a plan that I would have been oversold.  

I always assumed that if someone wanted to work at a large financial institution, that they would require a clean record. I mean, if the person could be overseeing millions of dollars, wouldn’t the industry look to hire the most reputable people out there?  

My thought process was that fraud happened gradually, just like how someone becomes a gambler. Before becoming a gambler, a person may feel fine in their financial situation, then something like inflation or a large expense, or getting with an expensive significant other happens, then the person looks for a way out. Gambling may be the easiest way for someone to get out of their situation, or a last resort, and next thing you know they are hooked.  

I’ve viewed fraud the same way. It’s something that people don’t even think about ever doing, until someone like a prestigious Beverly Hills lawyer marries a “Real Housewife” and then has to continue to figure out ways to fund her outlandish dreams, until the pot runs dry. Then next thing you know, victims to a plane crash have their funds from the airline lawsuit embezzled.  

What’s opened my eyes while working here is that there are plenty of financial advisors out there with questionable histories who are still allowed to practice, even after receiving disciplinary action. An AdvisorCheck advisor who is a professor of law over at Stanford Law wrote a few studies that I read.  

The two biggest takeaways were this:  

1. The financial services industry has a recruitment problem. People aren’t lining up to be financial advisors, so firms are willing to overlook bad actors and give them another shot.  

2. 25% of financial advisors who participate in misconduct are repeat offenders.  

Each month, there are about a dozen financial advisors who are restricted from participating as a financial advisor, or working at a broker-dealer or registered investment advisor. About half a dozen firms are restricted from practicing each month as well.  

Due to these issues, some would assume that it would be safer to work with a larger firm. Yet, while working here, I’ve seen that a financial advisor was reprimanded for operating a Ponzi scheme at one of the largest financial institutions in the world.  

So where are the checks and balances? 

My belief is that people show signs of their actions along the way. And those experiences from an individual may not be too different from another. So if someone is incurring fines, or worse, participating in misconduct, then those trends could be spotted early on. And while there is a path for redemption for some, sometimes being shown what you are doing first can lead someone back down the right path eventually. 

Reviews have a way to protect people across the board. But so many companies approach it the wrong way. Most try to use it as a way to generate testimonials. Yet, does that provide a transparent landscape? 

When you open up feedback to the general public, you get to see the good, the bad and the ugly.  

Many people my age are hesitant to work with a financial advisor to begin with, and it’s not just because of the movies either.. We’ve had a lot of questionable first person experiences along the way. And while there are amazing financial advisors out there, the questionable ones stopped us in our tracks.  

So the reason I joined AdvisorCheck is because I believe in a system that holds an industry that directly involves money accountable, through the feedback of the general public.  

Why wasn’t this done before? 

Well, that doesn’t matter as much, because it’s being done now.  

Oh and I also enjoy the topic of financial literacy and feel that everyone deserves a life free from the woes of financial stress.  

Written by Leonard Kim