ALLEGED UNSUITABLE INVESTMENTS. (2006)

$5,223.10

$2,633.00

I THINK IT IS IMPORTANT TO NOTE THAT THIS ALLEGATION WAS MADE BY A CLIENT HELD IN A JOINT REP ID. THERE WERE TWO OTHER ADVISORS ON THE ACCOUNT. I NEVER MET WITH THIS CLIENT, AND THE RECOMMENDATION WAS MADE BY THE SENIOR ADVISOR AFTER HE MET WITH THE CLIENT MULTIPLE TIMES. THE ALLEGATION THAT THE INVESTMENT WAS UNSUITABLE IS COMPLETELY UNFOUNDED. THE SENIOR ADVISOR SPENT SIGNIFICANT TIME WITH THE CLIENT, AND BASED ON THEIR STATED RISK TOLERANCE, EVENTUALLY RECOMMENDED THE EQUITY AND INCOME FUND. THIS IS A BALANCED FUND THAT HISTORICALLY INVESTS IN BOTH EQUITIES AND BONDS. THIS FUND FALLS UNDER MORNINGSTAR'S MODERATE ALLOCATION CATEGORY. PLAINLY STATED, THIS IS NOT AN "UNSUITABLE" INVESTMENT, AND THE RECOMMENDATION WAS ENTIRELY APPROPRIATE. UNFORTUNATELY, WE CANNOT TIME THE MARKET AND THERE WAS A QUICK PULLBACK SOON AFTER THE INNVESTMENT WAS MADE. THE CLIENTS PANICKED, AND ASKED TO SPEAK TO OUR BRANCH MANAGER. HE ALSO INFORMED THE CLIENT THAT THE INVESTMENT WAS ENTIRELY APPROPRIATE, BUT TOLD THE CLIENT THEY HAD THE ABILITY TO FILE A FORMAL COMPLAINT. THIS IS ULTIMATELY THE DECISION THE CLIENT MADE. I BELIEVE IT'S ALSO IMPORTANT TO NOTE THE METRICS OF THIS ALLEGATION. THE CLIENT HAD $60,000 TO INVEST AND THE ALLEGED DAMAGES WERE $5,223.10. THIS AMOUNT INCLUDED THE INITIAL LOAD FEE. AN 8.7% DECLINE. INVESTING INVOLVES RISK. THIS WAS CLEARLY STATED AND EXPLAINED TO THE CLIENT. THE CLIENT CLEARLY MISREPRESENTED/MISUNDERSTOOD THEIR OWN RISK TOLERANCE.