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What Are Some Signs of a Bad Financial Advisor? Part 1 of 3

Have you suffered a loss in your investment portfolio based on advice or services (or lack thereof) received from a finance professional?  In this 3-Part article, I will guide you through some potential signs of financial advisor fraud and misconduct, with the objective of helping you understand whether you are or could be a victim. 


Have they acted outside of your best interests?

You may wonder why you would receive advice that is not suitable for you. Unfortunately, the world is full of financial advisors acting in favor of their own interests, normally in the form of commissions. Some financial advisors, those who are “fiduciaries” must put their client’s best interest first and avoid all conflicts of interest, charging a small fee for their advisory services. Others, who are not “fiduciaries” do not necessarily have this obligation. They only must recommend investments that are “suitable” for the investor, which leaves room for them to push things that make them more commission but are not necessarily in your best interest. If you haven’t already, you should find out if your financial advisor is a “fiduciary”. And either way, if they have not acted in your best interest, this is a warning sign. 


Have they promised guaranteed returns, or have they been unwilling to discuss returns openly and honestly?

There is no such thing as a risk-free investment. Any broker or financial advisor who promises guaranteed results should raise a red flag in the eyes of his investors/customers. Furthermore, they should be able to openly communicate about average returns and what you can expect based on these indexes or averages as well as provide you with reporting every quarter or year to compare the performance of your investments to the market. If they haven’t done this, they might be trying to hide something. 


Have they been hesitant to focus on investment advice tailored to your needs?

Advisors and the firm they work for must provide you, as their client, with appropriate information to fully understand any investment that is recommended. Your financial advisor should have asked questions about your goals, family size, long term vs. short term cash needs, income, available cash, current investments, and risk profile. And they should have tailored a plan to suit those needs. If you feel you have been given a cookie cutter approach, be aware, ask more questions.


Throughout our years of experience, we regularly come across people who are victims of their financial or investment advisors. Often times, they recognize the obvious loss but not the gross negligence. It’s difficult seeing financial advisors taking advantage of their clients, and the hardship that follows. For that reason, we have dedicated our careers to helping affected investors take action. If you have concerns about whether you have been a victim, contact our office at +1 (855) 920-0772  for a free consultation.

And be on the lookout for further blog articles detailing more signs of a bad financial advisor. Part 2 of this series of articles will be posted next week! 

Matthew Schwartz

Matthew Schwartz is a Shareholder at Schwartz, P.A. where he serves as the practice group leader for their securities litigation and professional negligence practice group. His practice is focused on plaintiff-side securities arbitration and litigation, representing individual investors and institutions in claims against brokerage firms, investment advisors, commodities firms, hedge funds and others. He also represents plaintiffs who have been damaged by their insurance agents, lawyers, accountants and other professionals. He is an accomplished commercial litigator who has handled a variety of business disputes and other consumer claims.

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