Unsuitable Investments

Brokers have many duties to uphold when acting on behalf of their clients. One of these important responsibilities is making sure that the investments recommended to clients are appropriate, or “suitable,” for the particular clients. Every investor has different considerations when approaching investment decisions. Your broker has the duty to know about you and your individual investment situation before making recommendations thus to avoid unsuitable investments. If your broker fails to satisfy this duty and does not know the pertinent information about your investment profile, you may have grounds for a securities law claim to recover losses.

Major considerations that are part of an investor’s “profile” include risk tolerance, financial situation, and investment goals and needs. An investment that may be suitable for one investor may be an unsuitable investment for another. As an example, for many investors, a recommendation to engage in a 1031 exchange and place $500,000 in a Tenant in Common investment would be an unsuitable investment. Imagine investors who are retired and selling their single piece of owned property with little previous investment experience and a relatively small nest egg. If these investors lost their entire $500,000 on the Tenant in Common investment, they may be left with relatively little to carry them through retirement, potentially even causing them to return to work or not be able to pay medical bills, should they or a loved one become ill. Brokers must act with their clients’ concerns at the forefront; unsuitable investments can have drastic effects on the lives of investors and your broker has the duty to act with your best interest in mind.

At Goodman & Nekvasil, most of the claims we pursue involve unsuitable investment advice. If you believe your broker may have recommended unsuitable investments, contact us now for a free, confidential consultation to discover if we can help.