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Is your financial advisor trustworthy? Or, not?

You may think that the ADV brochure you received tells you all you need to know about your financial advisor. Think again. The SEC does not require a registered investment advisor to disclose suits which have been filed against it, whether they were settled or went to trial. If the registered investment advisor manages less than $100 million, it may be regulated by the state, not the SEC. There may be no record of lawsuits because the agreement with the RIA requires arbitration. In any event, it is up to your advisor to decide whether any customer complaint, suit or arbitration is “material” and so requires disclosure.

Go beyond the Form ADV. Ask for a copy of the CRS.


Ask whether a client has ever filed a written complaint against the person or the firm.

Ask whether a client has ever filed an arbitration claim against the person or the firm.

Ask whether a client has ever filed a lawsuit against the person or the firm.

If your financial advisor is a brokerage firm, it must disclose that on BrokerCheck, run by the Financial Industry Regulatory Authority (FINRA). Some registered investment advisors are also so registered. But not all disclose.

What if you have a dispute? It is likely that your agreement requires arbitration by the American Arbitration Association or JAMS, formerly called Judicial Arbitration and Mediation Services. This does not come cheap: even with only one arbitrator, it could easily exceed $60,000 – half of which you must pay upfront. Almost none of the cases ever make their way into the public record.

Before signing up with a financial advisor, ask that any disputes be arbitrated by the FINRA. That is cheaper – and the results will be public.


Elder law attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is an Approved Guardianship Attorney. She assists people in elder law, estate and special needs planning, guardianship and settling estates. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.

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