Financial advisors have a significant amount of responsibility as they act as fiduciaries to many individuals. They are required to make decisions in the best interest of their clients with the intent of preserving and growing their wealth.

Not only does this require extensive knowledge of the financial markets, financial products, and their customers, but it also requires a clear and capable mind to be able to make important decisions. Avoiding the use of drugs helps in that area.

Key Takeaways

  • Drug testing for financial advisors is not required by any regulatory body in the United States.
  • For the most part, all employers require an employee to take a drug test before starting at a firm.
  • The most common type of drug test required by financial advisory firms is a five-panel drug test. This test is designed to detect the five most common recreational drugs: marijuana, cocaine, amphetamines, opiates, and PCP.
  • Between 2008 and 2012, the financial industry ranked lower than most industries in terms of illicit substance abuse, both within the past month and within the past year.

Drug Testing Requirements

Financial advisors are not drug tested by any federal or state regulatory body. This means that they may receive their Series 6, Series 7, Series 63, and Series 65 licenses without undergoing drug screening. These exams fulfill different requirements related to selling financial securities to individuals.

That said, many employers who hire financial advisors require them to pass a drug test before an official offer of employment is extended. Some even conduct periodic drug tests.

Drugs and the Financial World

The financial industry maintains a reputation of being plagued with recreational drug abuse. Pop culture has promulgated this phenomenon with big-budget movies such as The Wolf of Wall Street depicting the excesses present in finance.

The financial industry was known for this type of behavior primarily in the 1980s and the 1990s, however, has lost the stigma to a certain degree. This has to do with regulatory changes, but also social and health changes in society at large.

In a study published in 2015, measuring illicit drug use from 2008 to 2012 by industry, finance and insurance were further down the list. Finance and insurance were ranked 12 out of 19 for illicit drug use within the past month and 13 of 19 for illicit drug use in the past year. It's even lower for alcohol abuse.

Types of Drug Tests

Many variations of drug testing exist. The type of test you are given depends on the firm that orders the testing. The most common type required by financial advisory firms is a five-panel drug test.

This test is designed to detect the five most common recreational drugs: marijuana, cocaine, amphetamines, opiates, and PCP. Therefore, an advisor who is abusing anabolic steroids or a prescription painkiller such as Percocet would not fail such a test.

More extensive tests screen for abuses such as steroids and unauthorized prescription drug use. Moreover, tests that analyze hair or skin samples rather than urine or blood can detect drug use from much further back.

How Often Advisors Are Drug Tested

Some firms require drug testing at periodic intervals throughout the duration of the employee's tenure. Other firms order testing only upon hire and when reasonable suspicion of drug use exists. Still, others require no drug testing at all. The easiest way to keep a drug test from jeopardizing your career as a financial advisor is obviously to avoid using drugs altogether.

The Bottom Line

Though there are no regulatory bodies that require drug testing for financial advisors, most companies that hire employees do require drug tests before starting employment. Some companies, though not all, periodically conduct spontaneous drug tests.

Financial advisors carry an important responsibility as many individuals and businesses entrust their financial health to them. Though the financial services industry has been known for substance abuse, this is no longer true. The industry ranks low amongst other industries when compared to illicit substance abuse and alcohol abuse.