A broker's failure to diversify a customer's portfolio may result in an excessive amount of risk to the customer without the corresponding potential for gain, which is beyond the customer's appropriate tolerance for risk. This is also known as "concentrating" an account. Examples of concentration may be (1) very high % of invested assets in one or a few stocks, or in one or a few sectors or industries, or in one or a few classes of assets. Over-concentration of an account is rarely suitable for an investor due to the excessive risk without the corresponding opportunity for gain, unless such investor is specifically suited for such high risk, and fully aware of how a concentrated account may affect the overall gain or loss in the account. Examples include:
- owning too much of one stock (employee stock options, company stock)
- owning too many mutual funds in the same category (i.e., technology funds)
- owning too many mutual funds in the same class (i.e. equity vs. fixed income)
- owing too many mutual funds with the same objective (aggressive growth vs. Income)
- owning too many mutual funds with the same core holdings
- owning too many assets in the same asset class
The failure to diversify a concentrated portfolio, or the negligent recommendation of a concentrated portfolio may be fraud or misconduct from which an investor is due a recovery of losses.
Where your investments over-concentrated? Call us at 903-597-2221 or contact us online.
Bryan Forman helped me through the turmoil of an investment advisor taking my family’s money. I was depressed and they gave me hope. They helped me recover some of the money taken from me. Bryan and his assistant Melody Bounds helped me with other concerns in my life and I am grateful. They kept me informed every step of the way and I highly recommend their firm.
Down to earth, personal, professional attention
Bryan and his assistant Melody could not have been more kind, compassionate and attentive. They explained everything that would be happening and were always available. My family is extremely grateful for the way they handled our legal issue. I would highly recommend them for your investment and securities issues.
I hired Bryan to help me with an issue with a financial institution. Bryan and his assistant Melody Bounds were professional and personal while resolving my situation. Bryan's experience and expertise were crucial in the positive outcome. Both he and Melody spent long hours researching and preparing my case. There was excellent communication during the process and they always kept me informed on the current events in my case. They treated me like family and not just a client. I would highly recommend Bryan Forman to represent anyone that needs legal representation regarding possible malpractice regarding investment fraud. Bryan will listen sincerely to your situation and give you his honest opinion on the validity of your case.