Claims Against Financial Advisors

Claims Against Financial Advisors

Losing money in a bad investment deal can be frustrating, but when do you know if you have – or should make – a claim against your financial advisor? When determining if you have a claim against your financial advisor, it is not always necessary to immediately file a law suit. Discrepancies in your portfolio may be readily explained, so reaching out to your financial advisor is a good first step before taking legal action.

However, if you are unhappy with the information that your advisor has given you, there are next steps you can take, including filing a complaint with the Financial Industry Regulatory Authority (FINRA). There are several common circumstances under which an individual has sufficient grounds to file a claim.

First, financial advisors are required to make recommendations based on the needs of their clients. When proposing investments, brokers take into consideration the financial situation of their client as well as what they hope to accomplish by investing. Such investment guidelines can be intuitive, or they can be intuitive based on the information that has been gathered through conversation.If an advisor acts outside of these rules, you may have grounds for a claim against your advisor.

You may also have a claim against your advisor if you lose a substantial portion of your principal after being told the investments being taken were low risk. This may be a result of the financial advisor omitting information in the recommendations to you. Similarly, irregular account activity could also be cause for concern, and may be worth looking into.

Finally, if your financial advisor deceives you through either directly or through omission of information, your advisor is not acting in your best interest and you could make a case against them; financial advisors are not allowed to make trades unless you authorize them to do so, and if they are going around their own recommendations you may have a strong case against them.


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