Be sure to educate your financial advisor

In particular, a financial advisor must know their client’s ability to bear losses and their tolerance for risk.

It is not possible to expect advice from a financial investment advisor if the client does not inform him of his knowledge and experience, his financial situation and his investment objectives. Because in such a case, according to the law, the council must refrain from recommending operations, tools and services, underlined the Court of Cassation.

According to the monetary and financial code, concerning rules of good conduct »the professional was asked until 2018, before giving advice, to ask his client about his general knowledge and his experience regarding the investment to be able to recommend financial transactions and suitable instruments.

But from 2018 the legal requirement is more precise, the adviser who must obtain this information on the experiences and knowledge of his client in relation to the specific type of financial instrument or transaction that he considers, to be able to formulate these recommendations. . In particular, he must know his client’s ability to bear losses and his tolerance for risk.

In this case, a client requested reimbursement from his advisor for the loss of more than €500,000 recorded on his portfolio and the judges recalled that, to avoid it, the professional had to demonstrate that he had fulfilled the its obligation of advice and information adapted to the client and the planned investment, without considering that the prospectuses provided will be sufficient or that the choice of dynamic management implies the acceptance of risks.

(Cass. Com, 15.6.2022, D 20-21.588).

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