Filing a Complaint about Your Financial Advisor

When and How to Complain About a Financial Professional

Filing a Complaint about Your Financial Advisor
April 30, 2014

When it comes to managing your personal finances and investments, you can either work with a financial professional or go it alone. If you decide to work with a financial advisor, though, you should be aware there is a chance things might not go as well as you hoped. In a worst-case scenario, you could even end up being a victim of investment or financial fraud, as the hundreds of victims in the Bernard Madoff scandal learned the hard way.

When to File a Complaint

The first thing to realize is that just because you have lost money in an investment doesn’t mean that your financial advisor has defrauded you or engaged in illegal activity and you should file a complaint. Investments, by their very nature, are inherently risky, as the stock market downturns following the 9/11 terrorist attacks and the 2008-2009 financial crisis made clear.

According to the Financial Industry Regulatory Authority (FINRA), financial advisors are prohibited from performing certain types of conduct, including the following:

  • Recommended the purchase or sale of a security that is unsuitable for you given your age, financial situation, investment objectives and/or investment experience.

  • Bought or sold securities in your account without first contacting you and receiving your authorization to make the sale or purchase. An exception to this is if you have given your financial advisor written discretionary authority to effect transactions in your account.

  • Switched you from one mutual fund to another without any legitimate investment purpose.

  • Misrepresented or failed to disclose material facts about an investment, like the risks, charges or fees involved in the investment.

  • Removed funds or securities from your account without your authorization.

  • Charged you excessive markups, markdowns or commissions on securities.

  • Guaranteed you that you won’t lose money on an investment, or made specific price predictions about an investment.

  • Failed to use reasonable due diligence to see that your orders are executed at the best possible price.

  • Used manipulative, deceptive or other fraudulent methods in order to sell you an investment.

What You Should Do

FINRA recommends that you take the following steps if you believe that your financial advisor has performed any of these practices:

  1. Contact your advisor and share your concerns with him or her. There may be a simple answer and resolution to your concern. Gather all your paperwork and documentation (like brokerage and confirmation statements) before making the call so you can refer to them to clarify anything that might come up during your discussion.

  2. If your financial advisor isn’t able to resolve your concerns, try to resolve the issue by talking to the firm’s branch manager or compliance department. Before making this call, it might be a good idea to put your complaint in writing so you can refer to this during the call or meeting.

  3. If the firm’s branch manager or compliance department is not able to resolve your concerns, your next step is to file a formal complaint with FINRA, which has jurisdiction over most brokerage firms and their employees. Specific concerns that FINRA can address include:
    • Complaints about a brokerage firm or individual broker
    • Complaints about an investment advisor or financial planner
    • Problems with buy or sell orders or account transfers
    • Problems with a 401(k), pension or other type of retirement plan
    • Suspected insider trading
    • The manipulation of security prices or volume

You can file a complaint with FINRA by using their online complaint form, a link to which can be found on this page. Or if you prefer, you can print the FINRA complaint form and mail or fax it to FINRA. Address the form to:

FINRA Investor Complaint Center
9509 Key West Avenue
Rockville, MD 20850-3329
Phone: (240) 386-4357
Fax: (866) 397-3290

The vast majority of financial advisors operate with honesty and integrity and with their clients’ best interests in mind. But experience has shown that there are a few bad apples in the bunch. Follow these steps if you suspect for any reason that your financial advisor has been dishonest, fraudulent or criminal in his or her dealings with you.

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