What to do if you've received bad financial advice (2024)

FAQs

What if my financial advisor gave me bad advice? ›

If you have received bad financial advice, you should start by making a formal complaint with your financial adviser and their company.

You must follow the company's complaints procedure. If you're not satisfied with the response, where you take the complaint next depends on who gave you the advice. If the adviser you saw was authorised by the Financial Conduct Authority (FCA), you should take your complaint to the Financial Ombudsman.

You're paying for a professional service, and if you're not satisfied, it's time to make a change. Notify them, on your terms: While it's not technically required, you should politely and respectfully inform your advisor that you're making a change. Keep it brief and professional.

Financial advisor negligence frequently involves “unsuitability” – the recommendation of a security or strategy which is not appropriate for the customer.

Some of the worst financial advice you can get is to only make minimum credit card payments. It's better to pay your balance off in full when the statement comes. Why? Otherwise, you'll end up paying interest that will keep your bill increasing and making it all the harder to whittle down your debt.

As with any expert giving advice, financial advisers must perform their job with the skill and care expected of any competent professional. If they fail in this regard, you may have a claim against an independent financial adviser or a bank representative handling your money and investments.

Even if you've made one of the worst money mistakes, a smart first step is to simply acknowledge your misstep, take a step back, and at first do nothing. A rash attempt to fix a problem can actually make it worse. Once you've accepted and assessed the damage, you can put a recovery plan into action.

How to accept financial mistakes? ›

Self-sabotaging thoughts about your financial past will prevent you from moving forward. Accept that mistakes happen and understand that they are opportunities for growth. Embrace the mindset that forgiveness is not about excusing your actions but about releasing yourself from the burdens of guilt and shame.

There are several warning signs that your financial advisor may be ripping you off, including high fees, hidden costs, and a lack of transparency. If you have concerns, it's important to speak up and ask questions.

People often switch financial advisors when they experience significant life changes or feel their current advisor is no longer suitable, but there is no set frequency for making such a change.

Financial advisors, as professionals whose clients rely on their advice to make financial decisions, are legally and financially responsible for the advice that they give.

Financial advisors and insurance agents may have a certain reputation in many circles. While I believe the majority are honest, some advisors may give the rest a bad name by focusing on the commission instead of the client. And, even if you meet an honest advisor, how can you know they will do the job suited for you?

In theory, if you have lost money because your broker (or any financial institution) gave you bad advice, mismanaged your investments, misled you, or took other unlawful or unethical actions, you can sue for damages. If these breaches of duty are provable, the "merits of the case" are strong, as a lawyer would say.