Can You Sue a Financial Advisor for Bad Advice?

When financial concerns arise, we turn to those more knowledgeable than ourselves for help. These are cases where it’s very likely you’ll hire a financial advisor for your needs. The financial advisor is supposed to provide good suggestions on the further course of action. Their job being evaluating the potential financial actions we can employ to guarantee growth. Of course, the bigger the investment the bigger the risks. If a financial advisor messes up we could be facing huge losses. In these situations it’s likely we’ll want some reparations, most likely culminating in suing our financial advisor. However, you may be asking yourself if it’s even possible to sue the financial advisor for losses, let’s look below and learn if and how it can be done.

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Financial advisors and their use


The two reasons we even hire financial advisors are to protect and grow our money. Their professional education gives them capabilities to give us good insight as well as helpful advice whenever an opportunity crops up. They basically maneuver with our money indirectly and carry a certain amount of responsibility when it comes to anything happening to our cash. While the constant changes on the market are difficult to predict and there will be times where something that seemed like a sure bet falls through, it’s the job of financial advisors to assist us to avoid these pitfalls. Our own business being in rocky waters could also make them very fruitful but them failing in either of these cases definitely endangers our business.

If a financial advisor gives you advice and it results in a failure, you could be able to sue them. The money lost on investments that have been suggested by your advisor can be seen as damages done by them on your business. These damages can be intentional, seeking to deceive you for personal profit or some other reason. In these cases, you definitely have a chance to sue for fraud or a similar crime. On the other hand, it could be a lack of attention being paid to the market itself. Regardless of the reason, it will allow you to file a claim for financial compensation. For which, you may need an advocate to represent you.

One service that may satisfy is which will offer a quicker resolution of the issue.

How to sue


While it’s good to know the situations where suing may come into play, let’s see the actual process. Or rather, let’s see what can enable you to sue the person over financial losses.

Utilize FINRA


The number of people engaged in the market logically leads to a lot of capital circulating. The sheer volume of it would naturally call for some protection for possible investors and users. Without it, fewer people would be encouraged to engage on that front. Doubly so when they have to learn the way the market works on their lonesome. That’s exactly why people end up working with financial advisors.

This further requires financial advisors to be properly educated and reprimanded if they make a mistake. For that exact reason, FINRA was formed. The acronym stands for Financial Industry Regulatory Authority, and it’s an organization that regulates itself. They are in charge of financial advisors across the board. If somebody does a bad job in this area or even outright loses money, they will have to deal with repercussions for it. Those who feel wronged by financial advisors also have a forum provided to them by FINRA which will allow them to settle disputes easier.

The fastest way to discern whether a financial advisor has wronged you is to check the FINRA ethical rules. This code of ethics is mandatory for its members, they are supposed to protect the investors from bad behavior by financial advisors. So let’s look over them:

If your financial advisor offers a purchase that’s not suited for your overall profile as an investor, they are breaching the ethical code. Financial advisors should conform their suggestions to those they engage with rather than going off on their own assumptions.

The next breach comes in the form of buying or selling without your consent. They also need a written confirmation from you to get the money flowing. Otherwise, they are committing a pretty sizeable breach of ethical rules.

Providing inaccurate facts and potential issues with the investment they suggest is another bad thing a financial advisor can commit. Revise the recent investment and make sure no details have been left out for whatever reason.

Deceiving or manipulating an investor into a deal is another breach of rules. Even if it doesn’t necessarily lose money for the investor, repeated behavior like this can prove to be harmful and may result in negative consequences for your investments so it’s best to get your complaint in while the situation is still benign.

There are a ton of other examples and rules that could showcase breach of contract but we suggest you check out FINRA’s official sources to revise all of them. That way, you’ll be better acquainted with the immediate breaches of rules set in place by this organization. Knowing if the financial advisor you are involved with is doing their job by the code can be very important. Any breaches will give you the immediate ability to resolve these issues using FINRA as somebody to mediate the claims of financial damage.

Arbitration through FINRA


As we’ve already mentioned, FINRA allows you to arbitrate and mediate disputes. The claims made in this area can be very complex, which can make regular court hearings a nightmare, so going for this style of resolution is usually easier. The speed and efficiency of utilizing this solution are without comparison. Even though you may assume that odds are stacked against you, considering that FINRA is directly tied to financial advisors, you should also keep in mind that the lifeblood of their organization is professional financial advisors who follow the code and investors like you who engage with said advisors. Just like everybody, FINRA wants to have the best public image possible. Dealing with inadequate financial advisors assists that.

Arbitration basically involves an entire trial. The usual steps that would be taken in court as witnesses, credibility checks, and establishing the issue are all present. The arbitrators of FINRA are dedicated to finding accurate facts that will better represent your case. They will also bring the final judgment based on available information.


After all, is said and done we can see that it’s very much possible to sue your financial advisor. Not only that, their breach of code brings FINRA into the mix. The fact that FINRA wishes to establish the highest possible level of quality when engaging investors with financial advisors will keep those investors who come to their forum with claims of financial advisors breaching code in a completely neutral position. There’s no need for worry because the focus of the organization itself is complying with said ethical code.