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Unhappy with your investment adviser? 3 things to know

On Behalf of | Jul 16, 2023 | Securities Fraud |

Retaining a financial professional to guide you on investments is an important decision.

Sometimes, the relationship falls short and an investor becomes concerned that an adviser has failed to honor industry standards. Here are three things to know if you run into this dismaying situation.

Investors have rights.

Investors have rights and entitlements, specifically an Investor Bill of Rights established by the North America Securities Administrators Association (NASAA):

  • Requesting and receiving information on the work history and background of the professional overseeing the account and the first itself.
  • Access to all information about risks, obligations, and investment costs prior to entering into a professional relationship
  • Communicating recommendations in place consistent with clients’ financial needs and investment goals
  • Receiving a copy of completed account forms and agreements
  • Being provided accurate and easy-to-read account statements
  • Having timely access to data regarding restrictions or limitations
  • Access to branch managers/compliance departments for discussions and addressing of concerns
  • Receipt of all information about commissions, charges, fees, and penalties

Financial advisers must follow certain rules.

Losing money on an investment of course does not necessarily mean that the adviser is responsible for the shortfall, even if investment recommendations result in poor performance. Securities involve the risk of loss, as an often-used disclaimer puts it.

But brokers and advisers who are engage in leading trading forums such as the New York Stock Exchange and many others are subject to several rules set forth by the Financial Industry Regulatory Authority (FINRA). One of these is prohibitions against misrepresentation, either by making untrue statements or by failing to disclose necessary facts.

Another rule concerns investment suitability, which involves making investments in securities that are at odds with the investor’s risk tolerance.

FINRA also has rules against making trades not authorized by the customer or failing to make a trade at the best available price.

FINRA mediation or arbitration may be available to get your money back.

Mediation is a process by which a neutral third party works with parties to reach a resolution to a dispute that doesn’t require going to court. Arbitration is another way to seek resolution outside of court, but with arbitration it is the third party who actually makes the decision. FINRA requires registered investment professionals to participate in either mediation or arbitration of disputes.


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