Financial Planning

5 Ways to Prove Your Financial Advisor Committed Malpractice

When hiring a financial advisor, many people invest their time and money with the assurance that they are receiving the best financial advice to manage their investments. However, this is not always the case and clients can be the victim of financial negligence without knowing.

If you feel you are in a situation where your financial planner has acted unprofessionally, you may have sufficient grounds for a financial planning compensation claim. Read on to discover how you can prove that you have suffered financial negligence.

Risk Profiles

An experienced financial advisor will conduct a risk profile for their clients. If you believe this was not undertaken sufficiently or at all, then you must consult with a lawyer about further steps you can take in strengthening your claim. Risk profiles are important for recommending appropriate investments based on a client’s best interests.

If you believe this was not a step your financial advisor took and you have suffered a loss as a result, then you have sufficient evidence to make a financial planning compensation claim. Be sure to ask your financial advisor to provide a copy of your risk profile so that you can prove your financial planner did not follow correct procedures.

Negligent Financial Advice

To prepare successful financial negligence claims, you will need to make sure you gather sufficient evidence that proves your financial advisor committed malpractice. Examples of this include:

  • Giving financial advice without taking into account personal circumstances
  • Encouraging risky investments
  • Insufficient monitoring of investments
  • Not explaining risks associated with certain investments appropriately

Remember, not all financial advice that leads to a loss can be considered negligent. However, if you can prove that you were given inadequate information which would have been provided by another financial advisor of the same expertise, you may have a case. Consult with a lawyer that specialises in financial negligence claims so that you can construct the best claim.


Commission Basis

Financial advisors who act on a commission basis may push clients towards risky financial products or investments in order to further profits. If your financial advisor has recommended such decisions which are not in your best interests and risk profile, you should consult with a lawyer immediately.

Try and obtain records of investments you were encouraged to make so that you can prove that you suffered financial negligence as a result of poor advice.

Significant Losses

Along with proving that you received negligent financial advice, you will need to show that you have suffered a financial loss due to malpractice. Possible risky investments that may prove financial negligence claims include:

  • Margin loans
  • Investing in risky shares and managed funds
  • Unfamiliar investments such as options and derivatives
  • Agricultural business investments

Many of these investments may be unfamiliar to new clients or may not suit your personal circumstances. If you were directed towards an investment without adequate knowledge of the risks associated with it, then you should include this information in your financial planning compensation claim.

If you have suffered a minor loss but still feel your financial advisor should be held accountable for their financial negligence, you should consult with a lawyer. Legal costs associated with filing a financial planning compensation claim may amount to more than your original loss which would make the process not worth your time.

If you find yourself unsure of whether your losses are worth submitting a financial planning compensation claim, consult with an experienced lawyer. Good financial negligence claims lawyers will have their client’s best interests at heart and give you advice based on each possible outcome.

Time Limit for Making a Claim

In order to file a claim, you must be within the strict time limits to do so. Luckily, you have six years from when you suffered the loss to file your case. Since you are given such a large time frame, if you miss this deadline, your right to receive compensation will most likely be forfeit.

It is important that you hire a financial negligence lawyer immediately so that they can make sure you claim is filed within time restrictions. This means that the responsibility of abiding by time limits will be your lawyer’s, so you won’t have to stress about looking up deadlines for certain documentation to be filed.


If you have suffered a major monetary loss due to financial negligence, then you should seek legal assistance immediately. Schreuders can offer you years of experience in financial negligence claims. Contact Schreuders today for a consultation to ensure your financial negligence claim has the best outcome.

Major Banks Compensation to their Clients for Negligent Financial Advice
Major Banks Compensation to their Clients for Negligent Financial Advice
Important Factors To Consider Before Choosing A Financial Advisor
Important Factors To Consider Before Choosing A Financial Advisor
Time Limits for Making a Claim Against a Financial Advisor
Time Limits for Making a Claim Against a Financial Advisor