Tips for Resolving Disputes With Your Financial Advisor

According to the Financial Industry Regulatory Authority (FINRA), the most common complaints filed against brokers and financial advisors are misrepresentation and unsuitability. Misrepresentation is defined as falsehood or omission of facts in relation to an investment. This is a classic case of a client believing he or she was told one thing, only to discover later that what he or she understood to be true was not the case. Unsuitability occurs when a broker or financial advisor invests a client's money in a security that is not suitable for the customer's investment objectives. There is a chance you could lose your hard-earned money by following the advice of a financial planner. If you lose money because of a financial advisor's incompetence or dishonesty, you might consider filing a complaint against him or her. Here are some things to consider when you are facing problems with your financial advisor.

Have You Talked to Your Financial Advisor?

Go to the source first, as there can sometimes be a breakdown in communication. If you are questioning a trade you did not authorize or something happened that did up add up to your expectations, give your financial advisor a call. Make sure you have all the proper documents with you, so you have all the facts in case you do not get the answer you are seeking. Insist on getting clarification on what has occurred. At this point, the truth of what really happened should come out.

Have You Sent a Letter to the Branch Manager or Compliance Department?

If you were not able to resolve the matter directly with your financial advisor, you should consider explaining the situation to the branch manager or compliance department in writing. Send the letter by certified mail to your advisor's firm. It's best to address the letter to the firm's compliance officer so that it gets in the right hands. Retain copies of your letter and all other related correspondence with the brokerage firm. If you do not hear a response in a reasonable amount of time, it is recommended to follow up with a phone call to ensure they are reviewing the issue at hand.

Have You Contacted a Professional Organization?

Most financial advisors belong to a professional organization. When a financial advisor joins one of these groups, he or she agrees to follow certain codes of conduct. If the advisor violates these codes, he or she could lose active standing with the organization. The financial advisor could also lose any credentials that the group offers. If you have a problem with an investment advisor, transfer agent, mutual fund company or public company, you may want to file a complaint with the Securities Exchange Commission (SEC) or your state securities regulator.

Have You Filed a Complaint With FINRA?

After you've exhausted all of your options with the investment firm and you believe that you have been defrauded, you now have the option of filing a complaint with the Financial Industry Regulatory Authority (FINRA). FINRA has jurisdiction over most brokerage firms and their employees and associate persons. FINRA makes it simple to file a complaint. You can access their online complaint form directly from their website. Before doing so, make sure you have exhausted other means in contacting the financial advisor's firm directly.

Have You Considered Arbitration?

In arbitration, an impartial person is involved in resolving a dispute between two or more parties. Arbitration has often been used to resolve consumer disputes with stockbrokers because it is quick and inexpensive. An arbitration award is final and binding. When you choose arbitration, you give up your rights to pursue your complaint through the courts. You file an arbitration claim with a self-regulatory organization (SRO). Anyone who brings a claim to arbitration has the right to hire an attorney or a non-attorney representative.

An important point to note is that simply losing money on an investment does not mean you can sue your financial advisor for bad advice. Remember, there is no guarantee that investors will always receive a return on their investment. Markets are risky by nature. When you invest, you have the option to build a low to high risk portfolio. You should file a complaint only if you believe you have been defrauded. Simply losing money is not enough to withhold a valid argument.

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