By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@paladinregistry.com
Site: http://paladinregistry.com
About: Jack writes for the InvestorWatchdog website and Worth magazine. He worked in the financial services industry from 1976 to 2004. For twenty of those years he was the president of a Registered Investment Advisory firm and a Broker/Dealer. Jack is the author of Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor and is a co-founder of PaladinRegistry.com.See Authors Posts (87) | July 9, 2009 | Deceptive Sales Practices

A recent visitor to Watchdog asked the following question.

"A financial advisor made several promises to us so we would sign a contract for an investment product. He earned a big commission check, but we lost most of our money based on his lies. The product company says they are not responsible for the advisor’s sales pitch. The advisor’s company said they are not reponsible for the performance of the product. Who is responsible?"

I have three comments. First, if all of the advisor’s lies were verbal, you have no proof of what was actually said. It’s your word against the advisor’s. Second, you may want to have an attorney read the fine print of the contract that you signed when you bought the product. But, don’t have high expectations for this approach. Virtually all contracts are designed to protect companies and not you. There is a slim chance the attorney may find something that protects your interests. Third, the company that holds the advisor’s licenses has a legal responsibility to supervise him. A failure to supervise is an actionable item.

Your best solution has already passed you by. You should has used a better process for selecting the advisor. Now you have a fight on your hands. Another angle worth pursuing is checking the advisor’s licenses with FINRA.org and your state’s insurance commissioner. The advisor may have a long history of lying to clients to win their assets. This would strengthen your position.