Financial Planning 

Many investors learn too late that fancy jargon, calming words and false promises of a major financial victory were used to cover the fact that their advisor failed to present and implement a sound financial plan.To produce an effective financial plan, your advisor must address and implement the concepts of the planning process, must thoroughly explore your circumstances and needs, and must regularly check for any changes that might affect your plan. This involves conducting a Know Your Client (KYC) process and fulfilling a promise of professional service.

Financial advisors must also fully explain the potential pitfalls of strategies such as opening a margin account to invest money borrowed from a broker or dealer, taking out a leveraged loan to increase the possible return on an investment, or using some existing asset (for example remortgaging your home) to borrow for investment purposes. The explanation must provide a clear warning that you could end up paying more for a debt you are taking on than what you make on the investment.

Likewise, financial advisors have an obligation to clearly outline the risks of taking out pension money early and using the commuted value for high-risk investments. The same responsibility applies to investments such as universal life, viatical settlement and vanishing premium insurance products. Failure to inform you of the potential pitfalls of borrowing to invest is a blatant breach of the financial advisor’s professional duty.

Above all, financial advisors have a responsibility to advise that you do not put all your eggs in one basket! Advisors who fail to diversify investments on behalf of a client by concentrating them in high-risk stocks and funds may be held legally accountable.

Unless your advisor specifically opted out of providing a financial plan at the beginning of your relationship, when the bottom falls out of the market and it is apparent that no plan was ever in place, you have a right to seek financial compensation.

If you feel your advisor failed to create and implement a sound financial plan for you, contact us to see if we can help you.