Exceptional and accessible legal representation across Kentucky and Nationwide

Exceptional and accessible legal representation across Kentucky and Nationwide

EXCEPTIONAL AND ACCESSIBLE LEGAL REPRESENTATION ACROSS KENTUCKY AND NATIONWIDE

More signs that your financial advisor is bad news

| Mar 20, 2020 | Representing Investors |

The stock market is giving investors large and small considerable anxiety right now. After more than a decade of a bull market, we’re seeing record drops. This is not the time for a financial advisor you can’t trust or who’s unqualified.

Sometimes, investors don’t see the signs of a bad advisor until times get tough. However, there are some red flags you can and should be aware of no matter how healthy the market is. Let’s take a look at a few:

Your advisor wants you to invest in a non-traditional product.

If they’re pushing you towards an investment you don’t understand or that you’ve never heard of, it may be highly risky. One attorney says that some 80% of his firm’s investor lawsuits involve nontraditional products.

Your portfolio isn’t diversified.

No one should have a large percentage of their investments in one sector. No matter how well tech, energy, health care or any other area might be doing at the moment, things can always take a downturn. The same diversification is important in the type of investments you have (like bonds, stocks and cash).

Your advisor tries to talk you into retiring early.

Maybe you’ve done well on your investments over the years. You’ve got a healthy portfolio. It may be tempting to retire at 50 and enjoy your wealth. However, if the market takes a long slide, you could be losing a significant portion of your life savings and have a hard time getting a job at your age to bring in some income. An advisor should never tell people to retire early on the assumption that their investments will continue to support them.

Your advisor can’t afford a malpractice judgment.

You might like the idea of going to a small “boutique” investment business. However, if it’s too small — or just too badly managed — to afford a payout if you need to take legal action, you might not be able to recover anything. About a third of judgments that the Financial Industry Regulatory Authority (FINRA) awards in arbitration can’t be collected because there’s no money.

How do you know if you lost money because of the vicissitudes of the market or because you had an unqualified or disreputable advisor? It’s best to consult an attorney to determine whether you have a case.