Skip navigation

Essential Reading

Ignorance can cost advisors dearly

Pay attention to your records. That's what advisors are always telling their clients, and they should think the same way about keeping track of their own personal and professional files. Unfortunately, not every advisor does, and their ignorance can cost them dearly.

Take, for example, Joan, a wirehouse advisor in Minneapolis. She lost a job and a good chunk of her business over a clerical error that left a big hole in her CRD. The mistake happened when her firm failed to register with the NASD that she had passed her Series 65 and 66 licensing exams, which permits an advisor to act as a fiduciary. Joan only learned of the slip-up three years later when the compliance department of a firm that was interested in hiring her told her that their research into her records didn't support her resume.

Not surprisingly, her prospective employer backed away. Worse, when she confronted her firm, they had to take away all her fee-based business because, like something out of Kafka, she wasn't licensed in the eyes of the NASD and the time limit for entering her passing grade had passed.

Jim, an advisor in the Sarasota office of a large regional firm, had an even bigger records problem. He got a job only to lose it because of something in his public record that he didn't mention.

That something was a felony Jim had committed as a teenager. He consulted his lawyer before he was interviewed for the job and was assured that as a youthful offender his record had been wiped clean, so, the attorney advised, Jim could say he had no criminal record.

Unfortunately for Jim, he accepted the lawyer's word rather than getting copies of his juvenile record himself. When the compliance department unearthed his transgression, he was fired for lying about his criminal record.

Righting Wrong

Robert, a wirehouse broker in Boston, was a little luckier than either Joan or Jim, but no less ignorant. When job shopping, he learned from prospective employers that he was being rejected because a check of his compliance record showed that his U5 reflected a “termination for cause” from his old firm, the broker/dealer of an insurance company. Actually, he hadn't been fired and was also able to take care of the mistake. He went back to the insurance company and got its compliance department to correct the error. Still, while his current employer was none the wiser for it, he had lost time in his job hunt.

Joan can correct her firm's failure by applying for an NASD waiver. The problem, though, is that the process is so time consuming that it might take two months to complete. While retaking the test might set her teeth on edge, she could be done with it in a matter of days and back to doing her old work.

There were no options for Jim. He was terminated for cause. He was, however, fortunate enough to find another job, though it paid a lot less than he was making before he was canned.

In the end, none of the lost time, money and jobs would have happened if Robert, Joan and Jim had stayed on top of their records. There's no excuse, including blaming an administrator or a lawyer. In the end, it's entirely within your power to take care of potentially damaging errors on your public record. It's often easy, too. Your CRD, for example, can be found online at Not checking your public record may result in you paying for someone else's mistake for the rest of your career.

Writer's BIO: Mindy Diamond founded Chester, N.J.-based Diamond Consultants, which specializes in retail brokerage and banking recruiting

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.