Inaya Mclaughlin
If you feel that your investment advisor has acted against your best interests, you may be able to file a complaint against them. Investment advisors have regulatory obligations and fiduciary duties to their clients that are enforced by organizations like the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC). If you believe your advisor has violated their professional obligations, there are several ways to bring this to the attention of the authorities.
| Characteristics | Values |
|---|---|
| First step | Contact your advisor directly to request a meeting and discuss your concerns |
| What to do before the meeting | Write down your concerns and questions |
| During the meeting | Share your concerns verbally or in writing |
| After the meeting | Write down your advisor's responses, including any action to be taken |
| If not satisfied with the advisor's response | Make a formal, written complaint to your investment firm |
| What to include in the written complaint | Details about what went wrong and when, as well as the outcome you are seeking |
| Firm's response time | Acknowledge the complaint within 5-10 days and provide a final response within 90 days |
| If not satisfied with the firm's response | Bring your complaint to the Ombudsman for Banking Services and Investments (OBSI) |
| Time limit for contacting OBSI | 180 calendar days from when the firm gave you its final response |
| If you are a resident of Quebec | You may also bring your complaint directly to the Autorité des marchés financiers (AMF) |
| If your complaint involves an investment dealer or mutual fund dealer | Contact the New SRO |
| If you want to pursue legal action | Consult a lawyer |
| What to do throughout the process | Document all the steps you take to resolve your complaint |
What You'll Learn
Talk to your advisor first
If you have a problem with your investment advisor, the first step is to talk to them about it. You are well within your rights to do so—it's your money, after all.
- Contact your advisor directly to request a meeting.
- Write down your concerns before the meeting. Common issues include unsuitability (receiving advice that does not align with your investment objectives), excessive trading, failure to follow investor requests, and misconduct.
- During the meeting, share your concerns verbally or in writing.
- Write down your advisor's responses, including any action they say they will take.
For many investors, an open discussion with their advisor resolves their concerns. However, if you are unsatisfied with your advisor's response, you can then make a formal complaint to your investment firm.
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Make a formal complaint to your investment firm
If you are unsatisfied with your advisor's response to your initial concerns, you may need to make a formal, written complaint to your investment firm. This should be addressed to the firm's management or compliance department. It is often best to send a letter or email that sets out the key details of your complaint. Be sure to include what went wrong, when it occurred, and the outcome you are seeking. For example, you may want your account corrected or financial compensation for unsuitable advice.
The firm has to acknowledge your complaint, usually within 5 to 10 days. They also have to provide you with their final response within 90 days. Their response should include a summary of your complaint, the results of their investigation, an explanation of their final decision, and the options available to you if you are not satisfied with their response.
If you are not satisfied with the response from your investment firm, you can escalate your complaint to the Ombudsman for Banking Services and Investments (OBSI). OBSI offers a free service to help you and will work with you and your investment firm to resolve your complaint. You have the right to bring your complaint to OBSI when your investment firm has had 90 calendar days to deal with your complaint but has not provided a final response. If you receive a response within the 90-day period but remain unsatisfied, you have up to 180 calendar days from the final response to bring your complaint to OBSI.
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File a complaint with a regulator
Filing a complaint with a regulator is a formal process that allows investors to report misconduct or unethical behavior by an investment advisor. This route is typically taken when attempts to resolve the issue directly with the advisor have failed or if the issue is of a serious nature. Here's a step-by-step guide on how to file a complaint with a regulator:
Identify the Appropriate Regulator:
Different countries and regions have specific regulatory bodies overseeing the investment industry. In the United States, the primary regulator of investment advisors is the Securities and Exchange Commission (SEC). However, some states also have their own regulatory bodies, such as the Financial Industry Regulatory Authority (FINRA) or state securities divisions. Investors should first determine which regulator has jurisdiction over their advisor.
Gather Documentation:
Before filing a complaint, it is crucial to gather and organize all relevant documentation that supports your claim. This may include account statements, trade confirmations, correspondence with the advisor, contracts, and any other evidence that can help explain the nature of your complaint. Having thorough documentation can significantly strengthen your case.
Understand the Complaint Process:
Regulatory bodies usually have specific procedures for filing complaints. Visit the regulator's website to understand the process, including any specific forms or formats required for submitting a complaint. Some regulators provide online portals or complaint forms, while others may require a written letter. Understanding the process beforehand ensures that your complaint is submitted correctly and expedites the review process.
Prepare a Detailed Complaint:
Craft a clear and concise narrative that outlines the nature of your complaint. Describe the events that transpired, highlighting any misconduct, unethical behavior, or violations of regulations by the investment advisor. Provide specific dates, amounts, and any relevant details. Explain the steps you have taken to resolve the issue directly with the advisor and the outcome of those attempts. Include your desired resolution, whether it is compensation, disciplinary action, or simply an investigation into the matter.
Submit the Complaint:
Follow the regulator's instructions for submitting the complaint. Provide all the necessary information, including your contact details, the advisor's name and firm, and any relevant account numbers. Some regulators may require additional information, such as the amount of financial loss involved. Ensure that you keep a copy of your complaint and any supporting documentation for your records.
Follow-Up and Provide Additional Information:
After submitting your complaint, the regulator will review it and may contact you for additional information or clarification. Respond promptly to any requests, and provide any further evidence or details that can support your case. Stay in communication with the regulator to understand the status of your complaint and any actions taken.
It is important to note that regulatory bodies typically handle more significant or widespread issues that could impact other investors. Complaints involving smaller amounts or isolated incidents may still be reviewed, but they might be referred to other dispute resolution avenues, such as arbitration or mediation. Investors should carefully review the regulator's guidelines before filing a complaint.
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Contact your state securities commission
If you have a problem with your investment advisor, you may be able to file a formal complaint against them. Before doing so, it is important to understand your rights as an investor. You have the right to access essential information about your investments, receive clear and understandable account statements, and know all fees, commissions, and transaction costs. You also have the right to receive investment recommendations that align with your financial needs and objectives.
If you believe your investment advisor has violated any of these rights, you can take the following steps:
- Contact your advisor directly: Request a meeting with your advisor and share your concerns with them. It is recommended that you write down your concerns before the meeting and also document your advisor's responses, including any action they agree to take.
- Make a formal complaint to your investment firm: If you are not satisfied with your advisor's response, you can make a formal, written complaint to your investment firm. Send a letter or email to the firm's management or compliance department, detailing what went wrong, when it happened, and what outcome you are seeking. The firm has to acknowledge your complaint within 5-10 days and provide a final response within 90 days.
- Contact your state securities commission: If you are still unsatisfied with the response from your investment firm, you can escalate your complaint to your local or state securities regulator. Each state has a division that handles complaints against investment advisors. They will be able to provide you with guidance and assistance in resolving your issue.
- Consider legal action: If none of the above steps resolve your issue, you may want to consult a lawyer to discuss your options for commencing a lawsuit or taking other legal action. It is important to document all the steps you take to resolve your complaint, including any correspondence with your advisor and investment firm.
It is important to act promptly if you have concerns about your investment advisor. Delays could limit your options and legal rights. Additionally, be sure to understand the fees charged by your investment advisor to ensure that your portfolio gains are not being eroded by their fees.
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Consult a lawyer
If you have a problem with your investment advisor, the first step is to talk to them directly and attempt to resolve the issue. If this does not work, you can make a formal, written complaint to your investment firm. If you are still not satisfied with the response, you can escalate your complaint to the Ombudsman for Banking Services and Investments (OBSI).
If you are still not satisfied with the response you receive, you may wish to consult a lawyer about your options for commencing a lawsuit or taking other legal action. It is important to act as soon as you have a concern, as delays could limit your legal rights and options later on.
An investment fraud attorney can help you draft and file your statement of claim, which is often one of the most important parts of the complaint process. They can also assist you in gathering evidence and arguing the merits of your case at your arbitration hearing.
An attorney can help you navigate the complexities of filing a complaint and ensure that your claim is well-organised and strong. They can also help you understand when and how to file a complaint against an advisor.
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Frequently asked questions
If you have a problem with your financial advisor, you can file a formal complaint with the Financial Industry Regulatory Authority (FINRA) and/or the Securities and Exchange Commission (SEC). You can also call the SEC’s toll-free investor assistance line.
Some common types of investment fraud include "pump and dump" scams and high-yield investment frauds. Financial advisors may also commit misconduct by trading on your account without your prior authorisation, failing to execute trades at the best available price, or front-running (trading ahead of client orders).
You will need to complete a "statement of claim", providing a detailed account of what occurred. You will also need to submit copies of all relevant correspondence, including emails, text messages, and letters.
If you are not satisfied with the response from your investment advisor or their firm, you can escalate your complaint to the relevant regulator. For complaints against investment advisors, contact the SEC or your state securities regulator.
When you invest, you have the right to access essential information about your investments, receive clear and understandable account statements, and understand all transaction terms and conditions. You also have the right to receive recommendations that align with your financial needs and objectives, and to keep ultimate control over your accounts.
