You are currently viewing What are Some Signs of a Bad Financial Advisor? Part 2 of 3

What are Some Signs of a Bad Financial Advisor? Part 2 of 3

You can read Part 1 of this series here.

Generating reliable retirement income is an incredibly important task for all of us but it can also be a daunting one. Getting a financial advisor or other professional to advise you on saving for retirement and on your investments is an expected and normal desire. But how do you know if you have received good advice? And how do you know your advisor isn’t more interested in making himself or herself money than making you money? 


In Part 1 of this 3 part article, I went over potential signs of financial advisor fraud and misconduct including:

– Financial advisors acting outside of your best interest

– Financial advisors promising guaranteed returns

– Financial advisors being hesitant to give investment advice tailored to your needs. 


In this next part, I will go over the next 3 potential signs of investor fraud and broker misconduct. 


1. Have they tried to push their own company’s funds or other securities in which they have a vested interest?

This is something that might be a little more difficult to detect. That said, a good financial advisor will answer truthfully about whether he/she is paid a commission on a security you are buying or have bought. If you feel your advisor avoids answering questions like this, becomes uncomfortable, or changes the subject when the conversation arises, it may be a red flag. 


2. Have they been hesitant to clearly explain how they are compensated?

The explanation for this is similar to the previous item. Again, a good broker or financial advisor should be able and willing to clearly communicate their compensation structure with you as well as any fees associated with your investments and who is responsible to pay them. There are various ways financial advisors can get paid including: commission, a percentage of assets, by fee, or a hybrid of some of these. By knowing their compensation structure, you can recognize if you have been taken advantage of to the benefit of the advisor and harm to your investment goals. 


3. Have they had any incidents on their regulatory record or changed firms a lot?

As an investor, you’re entitled to know about any incidents your financial advisor has on their regulatory record. With FINRA’s BrokerCheck tool you can easily check your financial advisor’s history by viewing a snapshot of their previous employments, licensing information, arbitrations, complaints and more. You should be looking for frequent movement between firms as well as any other disclosures of potential misconduct, as those may be big red flags.


If any of the three signs above sound familiar to you, I can help you take action. I have dedicated my career to helping individuals who have been taken advantage of by their financial advisor. Since the laws and regulations that apply to financial advisors are complex, I always recommend consulting with an expert if you are unsure as to whether you are a victim of misconduct or fraud. If you would like to talk to me about losses you have incurred, or any other concerns you may have, please contact me at +1 (888) 976-7281 or [email protected] for a free consultation. You can also request a free case evaluation by sending us a message through our secure contact form. 

Be on the lookout for further blog articles detailing more potential signs of a bad financial advisor. Part 3 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.