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When Your Financial Advisor Files for Bankruptcy

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What does it mean when your financial advisor files for bankruptcy?

You trust your financial advisor to be knowledgeable and trustworthy, but financial setbacks can affect anyone. What if your financial advisor files for bankruptcy? Would you still trust his advice?

CFP Board Discloses Bankruptcies

Periodically, the Certified Financial Planner Board of Standards releases a list of CFP professionals who have declared personal bankruptcy within the last five years. The planners are not subject to disciplinary action, and the CFP Board does not investigate the filings.

“The CFP Board verifies the bankruptcy and notes the bankruptcy filing on the CFP professional’s public profile, which is available through the search functions on CFP Board’s website,” a statement with the disclosure says. “The release of the information does not constitute discipline of these individuals and is provided only for the purpose of providing consumers with adequate information to make an informed decision with regard to engaging a CFP professional to assist with financial decisions.”

Of course not all financial advisors agree with the disclosure standards. Some claim that personal bankruptcy is not pertinent to their financial practice. On the other hand, financial troubles could tempt an unscrupulous individual to trade more than normal, even churning your account, costing you commissions for trades that might not be in your best interest.

CFP Board’s 2017 Report

On February 3, 2017 CFP Board released the most recent report of 20 certificants as having filed for bankruptcy since 2014.

Most CFP professionals fall under the jurisdiction of the Financial Industry Regulatory Authority (FINRA) and/or the U.S. Securities and Exchange Commission (SEC). This enables investors to perform a free search for their advisor at BrokerCheck. Bankruptcy judgments within the past ten years are reportable events and will be reflected in the advisor’s regulatory filings.

A combination of continued legislative action and recent pressure on regulators to make the industry more transparent may help in the future.

Your broker’s history is your business. A bankruptcy can happen to anyone for any reason; it isn’t necessarily indicative of a broker’s character or trustworthiness. But other events may tell you more about bad character, which can lead to investor abuses. Consumers have the right get all the information to make an informed decision.

Free Consultation

For a free consultation with a securities attorney, please call the firm at 1-888-637-5510.

The foregoing information, which is all publicly available, is being provided by The White Law Group.  The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.

For more information on the The White Law Group please visit our website at  https://whitesecuritieslaw.com.


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