‘He never explained anything’: I’m a senior citizen and I lost $100,000 in the stock market this year. Can I Sue My Financial Advisor?

I am a senior citizen and recently had a huge loss of $100,000 in the stock market turmoil. Can I Sue My Financial Advisor? I understand market dynamics as its ups and downs, and have pulled them out before.

However, it has been different with the market in this time frame as tech stocks are taking a big hit, as well as others. I advised my financial advisor that I was going into retirement a few months before all this happened.

Since my account was running at a loss, it did nothing to warn me that given the current situation, it might be a good idea to move my assets to another area to cover the loss – and at a later date. When things settle down.

Now I know through other advisors I’ve consulted, there is a term called “stop loss”, to do this, stop loss. She also mentioned that she failed in her duties as a consultant. He never explained anything like high or low risk management, or any other aspect of the market.

We only got in touch when I contacted him about buying into various stocks. Also, he never said anything related to my account. Can I sue and if so, how do I do it?

feel like a sucker

Dear FLS,

There are a lot of hurdles you’ll need to overcome in order to make a legal case to sue your financial advisor and, from what you’ve said here, it doesn’t sound like they’ve been met. There is an element of risk in any investment and the S&P 500 SPX,
-1.13%,
Dow Jones Industrial Average DJIA,
-1.01%
and Nasdaq comp,
-0.95%
There have been significant losses this year: down 19%, 16% and 27.8%, respectively.

Last year, you would have been on the back of the pig, and consequently a huge fan of your financial advisor’s strategy. But no advisor is perfect. And no one – regardless of past predictions – can predict the market. Even Warren Buffett, Oracle of Omaha, makes mistakes, And when he does he will accept them. This applies to your financial advisor — and your good self.

But back to your question of suing your advisor. You must first prove that you have entered into a trusting relationship with him. That is, he pledged to put your interests before his own and that he violated his duty. You must also prove a direct link between his actions and your losses, and show that those losses were predictable.

The Financial Industry Regulatory Authority has regulations in place to help ensure the safety of investors. read more Here, Gibbs Law Group specifies the distinction between outright fraud, misconduct and negligence, and gives some examples of the latter, including inappropriate investment, failure to disclose critical information, and over-concentration of investment.

Still, don’t look forward to your day in court. Most investment contracts include an arbitration clause. FINRA, and the Securities Industry and Financial Markets Association (SIFMA), a trade group representing securities firms, banks and asset managers, argue that arbitration saves all parties valuable time and money, and prevents small claims from retail investors. facilitates convenience.

a good advisor

A good advisor should “understand your circumstances” and recommend only appropriate financial products for your age, investment objectives, experience and desired level of risk, according to the law firm. writes in blog on this subject. “But reckless advisors sometimes lead you to risky or unsuitable investments in order to receive high commissions.”

Diversification helps protect investors from excessive losses, but does not deter them. It said, “Over-concentration of investments occurs when a financial or investment advisor fails to diversify a client’s portfolio, putting this client at high risk of loss.” Your losses could be in a wide range of stocks, as the market overall took a dive in 2022.

You may misunderstand the concept of “the one”fall off” And how does such an order come about. It is an order made by the investor, perhaps in consultation with his broker, to sell the stock if it drops to a certain level. But while it can stop the bleeding in your portfolio, it can prompt you to sell a lot of stocks at a lower price, without waiting for a potential rebound.

There will be a paper trail, but don’t think your advisor can be sued because you can’t contact them as often as you want, even in such a turbulent market. Sometimes, the best action is no action. You lost $100,000. We don’t know whether it is 100% or 10% of your total portfolio. In general, as you get closer to retirement, your investments should become more conservative.

Obviously, if you consult a lawyer, you will need to furnish more details. However, from your letter, it sounds like you are upset about the loss of your paper, and your advisor is taking the blame. But regardless of the terms of suing your advisor as described above, there are two people in this relationship, and in many cases the responsibility works both ways.

check out The Maniast Private Facebook Group, where we seek answers to life’s most thorny money issues. Readers write to me with all kinds of dilemmas. Post your questions, tell me what you’d like to learn more about, or peruse the latest Manifest column.

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