How To Resolve Disputes With Your Financial Advisor

There’s no way around it: Losing money is awful, and when losses start to add up, it’s almost a reflex to start looking for someone to blame.

For many investors, the obvious culprit is the broker or financial advisor. Below, we focus on possible disputes with your financial professional and how to deal with them.

Key Takeaways

• Financial advisors have specific regulatory obligations and fiduciary duties to their clients that are enforced by organizations like the Financial Industry Regulatory Authority (FINRA) and U.S. Securities and Exchange Commission (SEC).
• If you feel a violation or mismanagement has occurred, first be sure that you haven’t just experienced normal market losses.
• Losing money is not grounds for a claim unless your advisor has engaged in unethical conduct.
• If you feel like you have been legitimately wronged by a broker or advisor, you can file a complaint with FINRA.
• If your advisor has a professional certification, you can also notify the credentialing body.

Understanding Your Rights With a Financial Advisor

When you entrust your money to a financial professional, they have specific duties and obligations to uphold. Your fundamental rights as an investor are outlined by regulators that include FINRA and the North American Securities Administrators Association (NASAA). Understanding these rights is crucial to recognizing potential violations.

“One red flag when working with an advisor that isn’t in the client’s best interest is them giving you advice in an area that they don’t have a lot of experience and expertise in,” David Flores Wilson, a certified financial planner at Sincerus Advisory in New York City, told Investopedia. This could cause them not only to offer bad advice but also to fall afoul of their legal and ethical duties.

When you invest, you have the following rights:

1. Ability to access to essential information on your investments:

• Right to receive complete background information about your advisor and their firm
• Right to understand all risks, obligations, and costs before investing
• Right to receive clear, understandable account statements

2. That the investments you’re advised on are appropriate for you:

• Right to receive recommendations that align with your financial needs and objectives
• Right to understand all transaction terms and conditions
• Right to know all fees, including commissions, maintenance charges, and transaction costs

3. That you keep ultimate and meaningful control over your accounts:

• Right to receive copies of all completed account forms and agreements
• Right to access your funds in a timely manner
• Right to be informed about any restrictions on account access

4. That you can work toward resolving problems when they arise:

• Right to discuss concerns with the firm’s branch manager or compliance department
• Right to receive prompt attention and fair consideration of your concerns
• Right to contact state or provincial securities regulators for verification of credentials or filing complaints

Before working with a financial advisor, ask them if they are a fiduciary. This means that they have a legal obligation to put your needs first.

The Rules for Financial Advisors

An essential point is that losing money alone doesn’t constitute grounds for a complaint against your advisor. Markets are inherently risky, and even well-researched investment recommendations, even those considered “risk-free,” can result in losses. Nevertheless, financial advisors are bound by specific regulatory restrictions designed to protect investors when problems go beyond market volatility.

Yvan Byeajee, author of Trading Composure: Mastering Your Mind for Trading Success, says too many investors find it “difficult to focus on the probabilistic nature of trading, where the process matters more than any single outcome.” As such, they tend to engage in rash trades or blame the messenger, in many cases, their financial advisor, when they’re just on the wrong end of the normal risks that go with investing.

But there are problem advisors, Byeajee noted. “If someone presents themselves as a guru with all the answers, turn around and walk away.”

FINRA enforces several key restrictions on advisor conduct. These involve the following:

Misrepresentation

Advisors are prohibited from making false statements or omitting material facts about investments. This includes making specific price predictions or guaranteeing that you won’t lose money. If the facts about an investment opportunity prove significantly different from what your advisor told you, the advisor might have committed misrepresentation.

One major area where FINRA’s audits have found problems is advisors working with crypto assets. A 2024 FINRA study found that seven out of every 10 crypto-related retail communications by member firms it reviewed had substantive violations of its prohibition on “claims that are false, exaggerated, promissory, unwarranted, or misleading.”

“With the growth in this market and increased interest in crypto assets, the potential harm caused by problematic communications has also increased,” said Ira Gluck, FINRA’s senior director of advertising regulation, on a FINRA podcast related to the study. “We’ve been concerned about how communications discuss the protections offered through the federal securities laws or FINRA rules… However, there are no such protections for accounts held at crypto asset entities.”

Even if you and a potential advisor aren’t working with crypto assets, you still need to carefully vet their pitches. While the 70% figure for crypto communications is incredibly high, the normal figure of about 8% running afoul of FINRA regulations still indicates a need for vigilance.

Thus, even with traditional investments, it’s important to verify claims, ask questions about any promises that seem too good to be true, and ensure you fully understand the risks and costs involved with any investment recommendation.

Suitability

Investment recommendations must align with the client’s financial objectives, risk tolerance, and personal circumstances. For example, investing a large portion of a 75-year-old client’s portfolio in high-risk securities would likely violate the suitability requirement—these investors tend to need income-producing investments to help them meet living expenses and couldn’t afford significant capital losses.

As Sincerus’s Wilson noted, “Business owners deserve to work with an advisor that can provide customized, specialized advice to business owners. Likewise, an executive at a public company with tax and financial planning needs and considerations around equity compensation needs an advisor that has experience in this area to be most effective.”

Trading Violations

Other prohibited conduct includes the following:

• Trading on your account without your prior authorization
• Failing to execute trades at the best available price
• Front-running (trading ahead of client orders)
• Insider trading

Each of these restrictions serves to ensure advisors maintain high professional standards and put your interests first. If you believe your advisor has violated any of these requirements, you may have grounds for a formal complaint.

Warning

Before engaging the services of a financial advisor, make sure you understand their fees. Otherwise, your portfolio gains could go to paying them instead of into your account.

How To File a Complaint

If you think you have a legitimate dispute with your broker or advisor, there are a couple of steps you can take. The first is to contact your firm’s branch manager or compliance department. If the error cost you money, you should make this complaint in writing and keep copies of all correspondence.

If you aren’t satisfied with the firm’s response, the next step is to file a complaint with the relevant regulator. For broker-dealers, you’ll need to file a dispute with FINRA. For complaints against investment advisors, contact the SEC or your state securities regulator.

In addition, many financial professionals are members of a charter organization (you can usually tell by the abbreviations after their name). These organizations also have standards and codes of ethics, so it’s worth lodging a complaint with them as well. For example, if your complaint is against a certified financial planner, you can file with the Certified Financial Planner Board of Standards. If it’s against a chartered financial analyst, you can contact the CFA Institute.

Contacting your state or provincial securities commission is another option. Each state has a division that handles complaints against brokers, advisors, and financial planners.

If none of the above actions work to your satisfaction, consider hiring an attorney.

“Clients shouldn’t feel anxiety or guilt about moving on from an advisor that isn’t helping them achieve their goals,” said David Flores Wilson, a New York City certified financial planner. “A straightforward conversation outlining your decision to move on and clarifying if there are any open items should be enough.”

Choosing the Right Financial Advisor

The best way to avoid disputes with a financial advisor is to do your homework on them beforehand. Here are the steps to take:

1. Verify Credentials and Background

Always check the background of both the firm and individual advisor for any past disciplinary problems. You can do this through FINRA’s free BrokerCheck tool, which provides access to the Central Registration Depository, an extensive database of employment and disciplinary history. For registered investment advisors, check the SEC’s Investment Advisor Public Disclosure site.

2. Understand Their Approach and Expertise

Tobias C.L. Maag, a certified financial planner with extensive experience in client relations, said, “Your needs, objectives, and expectations should be clearly agreed upon at the beginning, and reassessed from time to time. This is probably the best ‘benchmark’ for both the client and the advisor.”

Be sure to ask about the following:

• Their investment philosophy and how it aligns with your goals
• Their fees and all associated costs
• Their communication style and frequency
• Their service model and what you can expect from the relationship
• Their regulatory registrations and professional certifications

Asking lots of questions from the beginning will give you a better understanding of the broker, as well as provide something to fall back on if you feel your money has been placed in investments that aren’t right for you.

3. Establish Clear Communication

Perhaps the most important thing you can do is be honest and direct with your advisor. If they suggest an investment you don’t understand, say so. A good advisor will take the time to ensure you fully get what an investment entails before proceeding.

But most people don’t just want someone to help them crunch the numbers. Peter Lazaroff, an Investopedia top-10 financial advisor, emphasized that modern financial advice goes beyond dealing with spreadsheets and financial information. “The best advisors these days resemble therapists more than number crunchers. Being a good advisor is about connecting with people, helping them solve their problems, and making life simpler.” If your advisor isn’t doing that for you—you don’t need to settle for less.

How Do I File a Complaint Against a Financial Advisor?

The process for filing a complaint depends on your advisor’s registrations and certifications. For registered financial product advisors, file with the SEC or state securities regulators. For brokers, file complaints with FINRA. Start by contacting your firm’s compliance department in writing.

If the response isn’t enough for you, you could then escalate things by contacting the relevant regulator. If your advisor holds professional certifications like CFP or CFA, you can also file ethics complaints with those organizations.

How Do I Find Out If a Financial Advisor Has Any Complaints Against Them?

You can research an advisor’s disciplinary history through several channels:

• For SEC-registered investment advisors, use the SEC’s Investment Adviser Public Disclosure website
• For brokers, check FINRA’s BrokerCheck tool
• For state-regulated advisors, contact your state securities regulator
• For specific certifications, check with the relevant credentialing bodies (CFP Board, CFA Institute, etc.).

How Much Can I Gain From Hiring a Financial Advisor?

While there are no guaranteed returns, research suggests that a financial advisor can amplify your investment returns by an average of 1.5% to 4%, depending on the time horizon and how those gains are measured. However, some of those gains will be lost to fees or commissions.

The Bottom Line

Financial advisors are entrusted with your assets, often representing decades of savings and hard work. While the industry is heavily regulated to protect investors, disputes can still arise. Understanding your rights, recognizing legitimate grounds for complaints, and knowing how to properly escalate issues are crucial skills to have should the need arise.

The key is to be assertive. Thoroughly vet advisors before working with them, maintain clear communication throughout the relationship, and document any concerns in writing. While market losses are part of investing, unethical conduct should never be tolerated. If you believe your advisor has violated their professional obligations, there are several ways to bring this to the attention of the right authority.

But before it gets to all that, look for someone with whom you can build a strong advisor-client relationship—one built on trust. This is your best protection against such disputes happening in the first place.