How to File a Formal Complaint Against Your Financial Advisor

When you hire a financial advisor, you expect the advisor to act in your best interest to prevent unnecessary losses. Unfortunately, however, financial advisors do not always live up to these expectations. In some cases, a financial advisor fails to follow an investor’s requests and guidelines or otherwise engages in misconduct, causing the investor to suffer losses. When this happens, the investor may be able to file an official complaint against the financial advisor through the Financial Industry Regulatory Authority (FINRA). In this article you will learn how to file a complaint against a financial advisor to recover your losses.

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Can I Sue My Financial Advisor For Structured Note Investment Losses?

Structured notes are investments that combine securities from several asset classes to create a single investment with a particular risk and return profile over a time period. Unfortunately, investment loss is not unheard of with structured notes. This article will try to explain how a structured note works and what you can do if you have lost money due to an advisor’s bad purchase decisions for you. Can I Sue My Financial Advisor For Structured Note Investment Losses? Yes, you can sue your financial advisor for structured note investment losses for one or more of the following reasons: The nature, mechanics, or risks of the structured note were misrepresented. The financial advisor failed to provide you with a prospectus, offering memorandum, or otherwise disclose all of the material risks of the structured product investment. The recommendation that you invest in a particular structured note was unsuitable. Your account was over-concentrated in structured notes which may otherwise have been suitable for a small percentage (10% or less) of your portfolio. What Are Structured Notes? Structured notes are investments which often combine securities of different asset classes as one investment for a desired risk and return over a period of time. They are complex investments that are often misunderstood by not only investors but the financial advisors who recommend them.  Structured notes are manufactured by financial institutions in all sizes and shapes. Generally, a structured note is an unsecured obligation of an issuer with a return, generally paid at maturity, that is linked to the performance of an underlying asset, such as a securities market index, exchange traded fund, and/or individual stocks. The return on the structured note will depend on the performance of the underlying asset and the specific features of the investment being made. The different features and risks of structured notes can affect the terms and issuance, returns at maturity, and the value of the structured product before maturity. They may have limited or no liquidity before maturity. Before investing, you better make sure you understand the terms and conditions and risks associated with the structured note being offered. Structured notes are often represented as investments being guaranteed by large financial institutions. Indeed, the top issuers of structured notes in 2021, Goldman Sachs (12.75%), Morgan Stanley (12.70%), Citigroup (12.46%), J.P. Morgan (11.92%), UBS (80.47%), Credit Suisse (4.99%), RBC (4.45%), Bank of America (3.90%), Scotiabank (3.89%), are some of the largest financial institutions in the world. It’s important to understand that although the benefits of owning structured products may be guaranteed to be paid by one of those large financial institutions, the amount of interest or principal being guaranteed is dependent upon the features of the product being sold; that is, the specific terms and conditions of the investment contract being purchased. In this low-interest rate environment the most popular structured notes being offered are structured notes with principal protection and income features. Some of the structured notes offer full principal protection, but others offer partial or no protection of principal at all. Some structured notes offer higher rates of interest that may be paid monthly and then suddenly stop paying any interest at all because payment was contingent upon certain events not happening. It all depends on the terms and conditions of the investment contract being purchased, which is why you must read the term sheet or better yet the prospectus to understand the nature, mechanics and risks of the structured note being sold. You need to understand that there are many key terms beyond the words “guarantor” and “guaranteed” which are used often to describe structured notes. You need to ask about and be sure to understand the following features of the structured notes being offered: the nature of the “reference asset” (a/k/a the “underlyings”) the reference index(es), ETF(s), or stock(s) underlying the structured note. whether the “reference asset” gets put to you at maturity (delivered) or you get paid in cash and forced to realize a loss. the “barrier levels” which can dictate the payment of interest and/or return of capital to the investor in the structured notes. whether the notes “auto-callable” which might force you to realize permanent loss that might not otherwise have occurred if you were allowed to hold the securities through market fluctuation. the “redemption dates,” or “observation dates, ” which may impact the amount of payment of principal or interest you ultimately receive. whether the interest payments subject to a “contingent coupon” and, if so, be sure you know the contingency parameter and the level where your interest payments may stop. How the “closing value” and/or “final value” of the “reference asset (as)” are calculated on the “redemption date(s)” or “observation date(s).” Are Structured Notes Suitable Investments? Let me answer that question this way, a particular structured note may be suitable for somebody but not everybody. With regard to the more common structured notes being offered by the major financial institutions these days, they are not suitable for individuals seeking an investment that: produces fixed periodic interest payments, or other non-contingent sources of income and/or you cannot tolerate receiving few or no interest payments over the term of the notes in the event the closing value of the underlings or reference stock falls below a barrier level on one or more of the observation dates. participates in the full appreciation of the reference stock rather than an investment with a return that is limited to the contingent interest payments, if any, paid on the notes. provides for the full repayment of principal at maturity, and/or you are unwilling or unable to accept the risk that you may lose some or all of the principal amount of the notes in the event the final value of the reference asset falls below the barrier value. They are not suitable investments if you are someone who: anticipates that the closing value of the reference asset will decline during the term of the notes such that the closing value of the reference asset will fall below...

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