When your relationship with your financial advisor isn’t what you had hoped it would be, you might consider taking legal action against the advisor or the brokerage. The Financial Industry Regulatory Authority (FINRA) offers dispute resolution to investors and financial advisors alike. The first step recommended by FINRA is to enter into mediation talks with your financial advisor; discussing the discrepancies in your portfolio with your advisor often explains and/or resolves the issues at hand. In the event that reaching out to your financial advisor directly fails, FINRA recommends discussing the conduct of the broker with the brokerage that employs them. These intermediary steps are designed to resolve issues informally, and to save money for the investor and the advisors.
Sometimes, however, arbitration is necessary. When mediation does not work, you can file a complaint with the FINRA to have disciplinary action taken against your financial advisor/brokerage. 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, and if an advisor acts outside of these rules, you may have grounds for a claim; second, if you lose a substantial portion of your principal after being told the investments being taken were low risk; third, 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.
When seeking an attorney to represent you in the state of California, it is important to know that the state of California requires out-of-state attorneys to submit a notice of intent to appear at the arbitration and obtain a certificate, to be reviewed by FINRA, in order to represent an investor in California. At YMS, we are experienced in representing investors during all stages of the resolution process, from mediation to arbitration.