Investment advisors have an obligation to “know the customer” and to make “suitable” investments on behalf of their clients. Not all investments are reasonable investments for all investors. People have different financial circumstances and risk tolerances. They are at different stages in life with different investment goals. Generally speaking, elderly investors tend to want to preserve their estates. Younger investors tend to be less risk averse. Some investors are investing a small part of their net worth; others are investing almost everything. For an investment advisor to render appropriate investment advice, he or she must ask sufficient questions from the investors to understand their investment goals. They must then use that knowledge to recommend investments that are consistent with the investor’s objectives.
“Unsuitability” claims are usually joined with other claims such as negligence or breach of fiduciary duty. If you or a family member believe that your investment advisor has placed you in an investment that you do not understand, you may have suffered from an “unsuitable” investment. You should contact a lawyer knowledgeable in this practice area. A successful claim requires a careful review of the records of the investment advisor and the investment firm. Do not delay.