Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from dealing with financial advisors and insurance agents who sell unsuitable insurance products. All too often, securities brokers who lose their licenses to sell stocks, bonds, and mutual funds find an escape hatch to remain in the financial services industry: They move on to sell insurance products. These “rogue” brokers, however, haven’t necessarily changed their ways. They may continue their abusive sales practices by selling insurance products instead.
A recent academic paper profiling “wandering” financial advisers who jump from securities to insurance found that “a little over one-third of advisors who exit the brokerage industry remain in at least one other regime, that advisors are significantly more likely to change regimes after committing serious misconduct, and that wandering advisors with a history of misconduct are significantly more likely to engage in future misconduct.”
In this study, “regime” means transitioning from selling securities to insurance products, noting “wandering advisors with a history of serious misconduct disproportionately end up in the highly-fragmented state insurance regimes.”