Clients rely on their financial advisor to guide them through complex issues and help them make important decisions. The advisor is expected to protect what the client has and grow it sensibly. Clients trust that the advisor will assess risk appropriately and make recommendations that fit the client’s risk appetite, their instructions, and their circumstances.
Sometimes, an investment performs worse than expected. In other cases, serious risks were never explained, or a product turned out to be unsuitable for their situation. The impact of negligent advice can be significant: reduced retirement savings, liquidity problems or difficult lifestyle sacrifices that would not have been made if the risks had been properly explained.
When Does a Financial Advisor’s Work Become Professional Negligence?
Determining if your financial advisor was negligent involves a few pivotal factors. These include whether the advisor assumed responsibility for guiding you (known as the “duty of care”), whether the guidance fell short of what a competent advisor should have provided (referred to as the “standard of care”), and whether that mistake has caused you a financial loss (so-called “causation”).
Examples of How Things Can Go Wrong
Depending on the circumstances, the following can constitute a breach of duty:
- Recommendations that did not match your risk profile
- Failure to explain key features or risks of a product
- Unsuitable investments sold as “low-risk” or “secure”
- Misleading projections or unrealistic return expectations
- Over-concentration in one sector, asset class or product
- Conflicts of interest that were not disclosed
- Poor advice on pensions, retirement planning or draw-down options
- Inaccurate or incomplete statements about how charges or fees would affect performance
- Failure to review a position when circumstances changed
- Advice that ignored income needs, time horizon or liquidity requirements
If you recognise any of these scenarios, it is worth discussing your situation so you can understand where the advice went wrong and what options you have.
Do I Have a Claim Against My Financial Advisor?
It is often not easy to tell if you have a claim. Investments can perform poorly and losses can occur for many reasons. Here are some tips to help understand how a potential claim is assessed.
What You Need to Be Able to Show
Duty of Care
If you engaged the advisor to assess your needs, recommend products or manage your investments, they owed you a duty of care. This can usually be proven by the engagement letter, the extent of the engagement, the existence of written suitability assessments or ongoing advice where you clearly relied on their expertise.
Breach of Duty
A breach happens when the advisor does not act with the level of care and skill expected of a reasonably competent financial advisor. This is not about hindsight or disappointment. It is about whether a careful advisor, faced with the same information, would have given different guidance, recommended a different product or warned you about the risks you ended up facing. To prove breach of duty against a professional, an expert opinion is required from an independent professional in the same field.
Causation
This focuses on whether the mistake actually led to your loss. We look at what the advisor told you, what you relied on, and what would have happened if the advice had been correct. If you would have made a different decision, avoided the product or taken a safer route, the loss may be linked directly back to the advisor’s error.
Loss
Loss can take many forms. You may have lost money on an unsuitable investment. You may have forfeited an opportunity you would otherwise have taken. You may now face costs, charges or financial consequences you were never prepared for. What matters is that the loss is real and measurable, and that it can be connected to the advice you received.
Time Limits for Bringing a Claim
Professional negligence claims must generally be brought within six years of the point when the cause of action accrued, which can be when the wrong advice was given or when the financial loss was first suffered. In financial-advice cases, identifying the correct date can be complicated. Loss sometimes develops slowly, and many people only discover the problem years after the advice was given.
Because these time limits can run out sooner than expected, it is important to get advice as early as possible.
Complaints vs Legal Claims
Where loss cannot be proven, or where legal costs do not justify a legal claim, an internal complaint or a complaint to a regulator might be more appropriate.
Frequently Asked Questions
What if my financial advisor says the investment was “just unlucky”?
You may hear this when an advisor is trying to distance themselves from the outcome. Losses do happen frequently in investing. However, that does not excuse unsuitable recommendations, or a failure to explain key risks. If the investment was inappropriate from the start, it may be negligence rather than bad luck.
How do I know whether the risk I took was actually explained to me?
A proper risk discussion should leave you with a clear understanding of what could go wrong, how severe the downside might be and what level of risk you are taking on. Important advice should usually be recorded in writing. A solicitor should review the suitability documents, emails and meeting notes to see whether the advisor properly explained the risks.
What if the advisor convinced me that a product was “safe” or “guaranteed”?
Some products are improperly described in confident terms even though their underlying structure carries real risk. If the advisor used reassuring language without breaking down the actual mechanics of the product, or if the product relied on conditions you were never told about, that may point to negligent advice.
Can I still bring a claim if I signed forms saying I understood the risks?
Signing documents does not prevent every claim. Many forms are long, complex and drafted to protect the institution rather than the client. It is important to consider the suitability of the product and the entirety of the advice, including what was said in meetings and correspondence.
What if I made several investments and only one of them went wrong?
You can still bring a claim for a single unsuitable product. Advisors sometimes rely on the fact that other investments performed well, but this does not excuse negligent advice on the one that failed. A careful review of the risk assessment and suitability analysis for that individual recommendation is needed to determine whether it should ever have been made.
Is it still worth pursuing a claim if the advisor has left the firm or moved abroad?
Yes. Claims usually proceed against the firm (in practice, the insurer behind the advisor defends the claim), not the individual alone. Even if the advisor has moved on, the documents, the suitability assessments and the firm’s records remain relevant.
What if the advisor handled both my personal finances and my business investments?
This is common, and it can make the advice more complex. We look at each area separately so you can see whether issues arose in your personal portfolio, your business decisions or both. Often, patterns emerge — such as the same product being recommended in situations where it did not fit either set of needs.
Could I have a claim even if I did not lose money immediately?
Yes. Financial-advice losses are not always visible straight away. Some products store up long-term problems, such as restricted liquidity, exposure to high fees, unsuitable risk levels or missed opportunities that become apparent only years later. If the product was wrong for you from the outset, the delay in discovering the problem does not undermine the claim.
Can you help me understand whether the advisor should have reviewed my investments more regularly?
If you were receiving ongoing advice, the advisor may have had an obligation to review your position at reasonable intervals, especially if your circumstances changed. It is important to look at whether reviews were promised, whether they took place and whether they were carried out with proper attention. A lack of review can itself be negligent if it meant you were left in an unsuitable position for too long.
What if I trusted the advisor for years and only now realise something was wrong?
Long-term relationships often create a sense of confidence that makes it harder to question past advice. Some clients come to us after years of trust, only to discover that major decisions were based on incomplete or unsuitable recommendations. It is worth remembering that claims against financial advisors are usually defended by the insurer for the advisor, not the advisor themselves.
Is an independent expert assessment needed to bring a claim?
Generally yes. Whether advice fell below the level of care and skill expected of a reasonably competent financial advisor is a question that must be looked at with a view from a similarly qualified independent expert. A solicitor will usually retain an independent expert to prepare an opinion.
Get in Touch
If you believe you have suffered losses due to the negligence of a financial advisor, please do get in touch. We can review the engagement and outline your options. We take some claims on a contingent fee basis.
You can reach us at gms@goodmurraysmith.ie
Disclaimer: This guide provides a general overview of issues in claims against financial advisors. It is not exhaustive and should not be used as a substitute for professional legal advice. You should always seek professional legal advice for your specific circumstances.