Can you sue your financial advisor? All investments come with risk. If you purchase stocks, bonds, or other securities, there is always the potential that you may lose money.
That said, if you hire a financial advisor to assist you in making financial decisions or managing investment accounts on your behalf, you should expect that they will work to ensure a positive financial outcome.
This is especially true if you have hired someone with a professional designation, such as a Certified Financial Planner. These advisors act as fiduciaries and thus are charged with putting client interests above their own, acting in good faith, and avoiding conflicts of interest.
So, can you sue a financial advisor or stockbroker if you lose money?
The short answer is yes—though the loss of money, by itself, is not grounds for a viable claim.
Typically, an attorney representing a client against a financial advisor must show evidence of at least one of three things:
Did the financial advisor or broker fail to effectively carry out the duties of their job? Did the advisor fail to supervise your accounts? Did the advisor breach a duty owed to his client?
Did the financial advisor make decisions that were inappropriate based on the client’s risk tolerance or investment objectives? For example, an aggressive stock fund might be inappropriate for an older retiree looking to preserve principal. This can be subjective and challenging to establish.
Did the advisor misrepresent investments, or make decisions simply to benefit himself? Did the advisor make frequent, unnecessary trades simply to boost their own commissions? Did the advisor lie about their credentials or qualifications?
If you engage an attorney, they will begin by reviewing your account statements, correspondence and other documents relevant to your claim. After a comprehensive review, the attorney will issue a recommendation on whether to proceed with a lawsuit against the advisor.
If you have questions about a potential claim you may have against your financial advisor, contact us for your free consultation.