How Does the Economy Shape the Financial Advisory Profession?

52 Pages Posted: 6 Nov 2019

See all articles by Kelvin Law

Kelvin Law

Nanyang Technological University (NTU)

Luo Zuo

Cornell University - Samuel Curtis Johnson Graduate School of Management

Date Written: October 1, 2019

Abstract

We examine whether economic conditions have a long-term impact on the composition of available financial advisors in the profession. We find that financial advisors who start their career in recessions are less likely to commit professional misconduct throughout their career, even compared with their colleagues working in the same firm, at the same location, and at the same point in time. We show that this relation between early economic conditions and advisor misconduct remains after controlling for differences in hiring firms, advisor job functions and quality, and opportunities to commit misconduct. Collectively, our evidence suggests a behavioral difference between recession and non-recession advisors and demonstrates that economic conditions partly shape the types of financial advisors who are ultimately available in the profession.

Keywords: financial advisor, recession, FINRA disclosure, misconduct, selection, imprinting

JEL Classification: D14, D18, G20, G24, G28, K22

Suggested Citation

Law, Kelvin and Zuo, Luo, How Does the Economy Shape the Financial Advisory Profession? (October 1, 2019). Available at SSRN: https://ssrn.com/abstract=3277533 or http://dx.doi.org/10.2139/ssrn.3277533

Kelvin Law

Nanyang Technological University (NTU) ( email )

Nanyang Business School
Singapore, 639798
Singapore

Luo Zuo (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

349 Sage Hall
Ithaca, NY 14853
United States
607-255-4002 (Phone)

HOME PAGE: http://www.johnson.cornell.edu/faculty-research/faculty/lz352/

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