Financial adviser background checks

Abstract

Using the 2009 National Financial Capability Survey, we identify demographic characteristics associated with financial adviser users who conduct adviser background checks and/or consider more than one adviser before making a choice, and if these activities improve their trust in financial advisers. We find that very few financial adviser users check backgrounds, but there is a positive relationship between adviser background checks and trust levels. Overall, these findings indicate that having a reliable background check system in place, allowing financial consumers to conduct adviser background checks in an easy and efficient manner, will help improve trust in financial advisers.