FINANCIAL ADVISORS AND STOCKBROKERS RECOMMENDING UNSUITABLE INVESTMENTS: A RECIPE FOR FINANCIAL LOSS

Kansas City residents and others throughout Missouri and Kansas trust financial advisors or stockbrokers to help manage and protect their investments.  Advisors and brokers are required to make sure their clients only invest their money in investments that are appropriate, also knowns as “suitable,” for their clients’ situation.  In simple terms, a suitable investment is one that fits within a client’s specific risk tolerance and satisfies their financial objectives.  Recommending suitable investments is the cornerstone of proper investment advice.

Regulatory organizations, such as the Financial Industry Regulatory Authority (“FINRA”), have specific suitability rules that govern broker’s actions with regard to recommending a specific investment to a specific investor.  These rules require that advisors and brokers recommend investments that are consistent with the needs and objectives of their clients.  Brokerage firms and financial advisors must learn all material facts about an investor before making any recommendations and must match all investments with a customer’s investment objectives. 

There are a number of factors that an advisor or broker should consider in determining the suitability of a particular investment for a particular client.  Some of these factors include a client’s:

  • risk tolerance;
  • financial needs;
  • investment objectives;
  • age;
  • income;
  • tax status;
  • liquidity need; and
  • financial situation and other securities holdings.

Has your advisor or broker discussed the suitability of your specific investments as they relate to your specific situation? If not, you may have suffered unnecessary investment losses.  Simply put, unsuitable investments can lead to unnecessary risk and substantial losses.  However, with the help of attorneys experienced in proving and recovering losses due to unsuitable investments, you may be able to recover damages.

Our firm has that experience.  We understand complicated investments and know how to uncover unsuitable investments in our clients’ financial portfolios.  If you believe you have suffered losses at the hands of a financial advisor or stockbroker that recommended unsuitable investments, you may be entitled to recover your losses through a lawsuit or arbitration (see our post here for more information on the arbitration process: Arbitration). Fill out the form below or give us a call to discuss your potential case. An initial discussion is always free.

**The information contained on this website is informational only and not intended to be, and does not constitute, legal advice.  While we attempt to update our site regularly, the information does not necessarily reflect the most current legal developments.  You should not act or refrain from acting based upon information provided on this site without first consulting legal counsel.**


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