Bad Financial Advisors – Can You Cut Your Losses and Still Get Paid?
Posted on | August 30, 2009 | 2 Comments
Bad financial advisors may be the cause of all the money you lost during the bear market. There are many perfectly legal avenues a financial advisor, or brokers as we use to call them, can lose all of your money and you can’t do anything about it. This is not to say that all financial advisors are bad. Anyone who has invested in the stock market knows it is always a gamble. It should not, however, leave you with the same odds of someone filing for bankruptcy in Las Vegas. When the house is set against you, what do you do?
So the question is, can you get your money back? Yes you can. As long as you fall in a certain category, you may be able to get the firm to pay you back. You should not try suing the brokerage. Trying to sue them will fail because when you became a customer you had to sign an agreement to settle any disputes in private arbitration. Settling out of court is your only option, but do not despair. You can get some money back!
Before you can truly begin you must first take a look at your account and see what happened. If you have a legitimate claim, great. If you do not then don’t press your luck. If you followed the financial advisors advice and moved your money at the “right” time, only to have lower gains or pure losses, there is nothing you can do. Ultimately it was your decision and that will be held against you. Often a financial advisor may play the game with their brokerage interests in mind. You lose your money so they can get paid. Once again, there isn’t much you can do.
Here is a list of things to watch out for:
- Churning
- Fraudulent Investments
- Unauthorized Trades
- Unsuitable Investments
- Creative Investing
The last one could be a blanket issue but I want to talk in more detail about these items. Churning is the practice of seemingly pointless trading to jack up fees. Fraudulent investments and unauthorized trades are sometimes the same. Today it is much more difficult for a broker to invest your money in a dummy company and get away with it. You may have specified you only want low risk investments but the financial advisor decided to place your money in high risk investments. All of these examples are inappropriate and grounds for arbitration.
You will need a lawyer. These firms are professionals and do not like to give back money. Contacting a lawyer and stating your case to them is the first step in knowing if you can get any of your money back. But be warned, there are many things to watch out for. You probably won’t get all your money back, and after lawyer fees, you may not have much to show for it.
The arbitration process can be tricky and often times is set against the claimant. The Obama administration has mentioned that it is against mandatory arbitration and you may eventually be able to threaten the firm with a lawsuit. That would make it easier in some cases to get your money. Most firms would probably want to settle out of court to keep their name in good standing.
Here at Benjamin Finance we know the difficulty and improbability of going up against a brokerage. But we can tell you it can be done and with persistence you can get some of your money back.
Author: Aaron Black President/CEO of Benjamin Finance
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August 31st, 2009 @ 7:51 pm
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September 1st, 2009 @ 8:18 am
[...] recently posted an article about the dangers of bad financial advisors and what to do if you find you have been swindled by one. Today I want to focus on who is [...]