Imagine trusting your entire hard-earned money to an investment advisor and then learning that he is playing fast-and loose with it. You would be shocked to learn that your babysitter was letting your children watch scary movies nightly. What options do you have? How to handle a rogue financial advisor – find out more.
You will need to collect evidence. It is important to keep a record of every conversation, transaction, and advice. Examples include emails, statements and contracts. You can’t just walk in and wave your hand at a regulator.
Consult your advisor. Sometimes it is a simple mistake, or misunderstanding. It’s often easier to resolve problems with simple conversations than by “compounding interest.” It is time to escalate when the other person keeps evading your questions.
In the event that talking doesn’t work, file a complaint with their firm. Each advisory firm offers a Compliance Department. They will be able to help you. Contact them, and make sure that your arguments are concise but detailed. Remain calm, and only focus on facts.
Still no resolution? The time has come to bring in the heavy hitters – the regulatory bodies such as FINRA and SEC. The organizations provide online reporting forms for unethical behavior or any misconduct.
FINRA deals with issues pertaining brokers and brokerage firms. SEC is responsible for investment advisors that are registered at the SEC. It’s okay if you don’t know which site applies. Each website offers information on the proper way to deal with each.
We’ll now discuss mediation and arbitration as alternatives to litigation before we move full speed into legal actions. Arbitration functions like a courtroom but is more informal. The arbitration process is quicker, yet still legally binding. A neutral mediator helps the parties reach an agreement but does not make any decisions.
You may want to hire an attorney with specializations in securities laws when things are really tight. Although legal counsel can be costly, it’s often necessary when things get really serious.
Don’t forget state regulators either! There is an independent division in each state that supervises the advisors who work within its borders. They can provide an alternative route to filing a complaint when the federal route has been blocked.
The social media are also effective in gaining rapid attention. However, be careful as public accusations can have a negative impact if the evidence is not strong enough.
The key to the entire process is patience. This problem will not be solved overnight, unless by some miraculous event, all parties involved become hyper-efficient. Be calm, and be persistent. Your judgement will be harmed by anger as you pursue justice or resolution.
Prior to engaging in legal proceedings, you should consider other dispute resolution methods. Social media should be your last option.
This simple guide is a compilation of practical tips and the financial knowledge gained through years of misadventures in financial waters.