When applying to register within the securities industry, whether as a registered representative of a broker-dealer or an investment advisory representative of an RIA, individuals must complete and file FINRA’s Form U4. The form asks for personal information such as employment and residential history, education, and designations, but is most commonly known for the section towards the end that requires individuals to disclose past events, including criminal history, disciplinary actions from a regulatory body, customer complaints, various financial events, and civil judgments.
Regardless of any mitigating circumstances, having any such “disclosure events” can complicate an advisor’s life and can sometimes even end careers altogether. Not only are most disclosures a permanent part of an advisor’s record, visible to the general public and included for review by prospective clients in the firm’s ADV, the process of dealing with the disclosure itself is also long and expensive, which can involve a formal hearing proceeding by the regulatory body involved.
In this guest post, Tyler Olson – owner of Olson Consulting LLC, an RIA located in Saint Joseph, Michigan – shares his own experience dealing with having a disciplinary disclosure on his U4 record, and the process he went through to move forward in the industry, establishing his own RIA and rebuilding his client base from the ground up after a 3-year ordeal led to a regulatory fine. Through his experience, Tyler learned valuable lessons and devised deliberate strategies to help him organize a failsafe system to avoid the same mistakes he made in the past.
Most importantly, Tyler has come to recognize that the three key characteristics that are vital to operating as a successful advisor are built around integrity and a strong ethical foundation. Specifically, endurance, humility, and respect are the central traits that will not only help advisors avoid potentially damaging mistakes but are also traits that will help an advisor persevere should they find themselves with a challenging disclosure event.
As he rebuilt his business, Tyler developed several strategies to discuss the disciplinary event in his background with prospective clients, organize his processes to prevent future mistakes, and stay abreast of industry trends by keeping up with the CFP Board and investor advocacy groups. He also maintains open communication lines with his state regulator (finding it is more effective to work with them proactively than trying to ‘stay under the radar screen’) and sticks to a structured weekly routine to keep his compliance protocol up to date.
Ultimately, the key point is that U4 disclosure events can be very difficult for any advisor to deal with, but by cultivating key characteristics, developing a strong work ethic, and having the right mindset, advisors who are given the opportunity to remain in the profession with a disciplinary disclosure really can move past the event and still build successful careers.