People often seek the assistance of financial planners to help in the management of their finances and achieving their financial goals. Unfortunately, some financial advisors lead people astray by offering negligent, misleading, or wrong financial planning advice.
Financial negligence is becoming more common and laws have been created/amended to reflect the importance of offering quality financial advice. The laws have been designed to protect victims of negligent financial advice since they usually suffer serious financial losses.
Financial negligence claims are designed to help compensate victims of unsound financial advice for their losses. If you believe that you have been given negligent financial advice, read on to learn more about how to make a claim against a financial advisor and what making such a claim entails.
What is a Financial Negligence Claim?
It is a means for the people that have sustained losses due to negligent, misleading, or wrong financial advice to get compensation for those losses. The financial negligence claim is typically made against the financial advisor or his/her employer.
It is worth noting that financial advisors are not responsible for all negative investment outcomes. Some investments rise or fall in value simply due to market fluctuations, rather than negligent financial advice and financial advisors can thus not be held accountable for those fluctuations.
What is Needed for a Financial Negligence Claim?
If you have sustained losses due to negligent, misleading, or wrong financial planning advice, you could be eligible to make the financial negligence claim. The criteria below have to be met before you make a financial negligence claim:
- You are Owed a Duty of Care by the Financial Advisor
A financial advisor usually owes you a duty of care if you depend on their advice and it is reasonable foreseeable that you are likely to sustain losses if the financial advisor does not exercise reasonable skill and care when offering the advice.
- The Duty of Care Was Breached by the Financial Advisor
If any of the examples above occurs, you have reasonable grounds to make your financial negligence claim.
- You Sustained Losses
If you are a victim of negligent financial advice you are likely to sustain financial losses.
- Losses Sustained Were Due to the Breach of Duty of Care
If you had not received negligent financial advice from the financial advisor, you would not have sustained any losses.
How Much Compensation Are You Entitled to If the Financial Negligence Claim Is Successful?
If the financial negligence claim is successful, you will receive compensation that restores your financial position to the pre-financial negligence state. You may also receive compensation for any expenses involved in trying to find a resolution for the negligence as well as for any lost profits.
It is often advisable to take legal action if the claim is of a significant amount (i.e. over $100,000). The calculations of compensation may be hard to assess and require expert estimation, which means that it would be prudent to seek legal advice to determine the most appropriate course of action.
What Are the Time Limits When It Comes to Making Financial Negligence Claims?
Financial negligence claims have a statute of limitations. You have a 6-year time limit to bring forth your claim, starting from when you first sustained the loss. It is possible for the time limits for making your claim against the financial advisor to be extended. However, the extension is only granted in exceptional circumstances and cannot be relied upon.
The Bottom Line
Financial negligence laws are important for protecting investors against unsound financial advice. If you have sustained losses due to unsound negligent, misleading, or wrong financial advice, you should get in touch with an experienced lawyer for professional legal advice and to help you with your financial planning negligence claim.