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How to Resolve a Dispute With a Financial Advisor

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Looking for FINRA dispute resolution guidance or information on resolving a dispute with your financial advisor? If you have hired a financial advisor to assist with managing your investments, there may come a time when you find yourselves at odds with each other. It’s possible that your advisor may not acting be acting in your best interest.. Or worse, you may feel like they acted fraudulently in some way.

Proving negligence or fraud is not easy. However, if you feel you have been wronged, you have the right as a client to file a formal dispute against the advisor.

Resolving a Claim Out of Court – FINRA Dispute Resolution

FINRA Dispute Resolution provides a binding arbitration process that allows clients and advisors to litigate claims without involving the court system. If you hired an advisor regulated by FINRA, you likely signed an arbitration agreement when you began working together. FINRA Dispute Resolution is similar to going to court but can be faster and less expensive, if you navigate the process correctly.

The two parties to the dispute select a neutral third party—an arbitrator—to listen to arguments, study testimony and other evidence, and issue a decision to resolve the dispute. Depending on the amount in controversy, there can be one arbitrator, or a panel of three arbitrators. The arbitrator’s decision, is final and usually cannot  be appealed .

What about Mediation?

Mediation is a voluntary and less formal process in which a neutral third party facilitates negotiations between you and the advisor.  The role of mediator is to assist the advisor and client in finding a mutually acceptable solution. Mediation does not result in a binding decision, but FINRA claims that its Mediation Program resolves four out of every five cases. Mediation can also take place outside of FINRA’s program and can have the same result.

By entering into mediation, neither the client nor the advisor gives up the right to pursue litigation, or arbitration, if a settlement cannot  be reached. If you hold an account at a Registered Investment Advisor, disputes may be handled through a separate, but similar, arbitration process. The agreement with your advisor will usually dictate where your dispute will be adjudicated.

Those clients without arbitration agreements can file a lawsuit against their advisor in state or federal court. In state or federal court, you typically have the ability to engage in more robust discovery, which can be costly and time consuming. If you have questions about potential claims you may have against your financial advisor, please contact us for your free consultation.