Do CFP® professionals engage in less misconduct? Exploring the importance of job classification when comparing misconduct rates among financial service professionals

Document Type

Article

Publication Date

1-1-2021

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.

Publication Title

Applied Economics Letters

Volume

28

Issue

21

First Page

1830

Last Page

1835

Digital Object Identifier (DOI)

10.1080/13504851.2020.1854441

ISSN

13504851

E-ISSN

14664291

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