More recently, brokers have been pitching investors on new, alternative investments. Alternative investments are those that are put into certain classes such as real estate, hedge funds, commodities, private equities, and more. These are often risky investments, but they are touted as benefits to investors. Brokers often inform investors that because these investments don’t have to abide by the same regulations as stocks, bonds, or cash, that they provide many benefits. This isn’t always the case.
Because there is a lack of regulation, there is no transparency and the broker may not inform you of the investments to which your money is going. It is important for you to act with caution if your investor is pushing you towards alternative investments. While the advisor will discuss the many rewards associated with the high risk, they may not inform investors of the large losses that can also affect an entire portfolio. Alternative investments can leave an investor with absolutely no money whatsoever and a completely empty portfolio.
With alternative investments, it is possible that your broker has invested in something with no liquidity. This means that you won’t have access to your funds if you need them. If things go bad, you can lose that money due to not being able to pull your funds.
Research is very important when it comes to alternative investments. There are many risks of which to be aware and discussing these options with multiple brokers or brokerage firms can give you the information you need to make an educated decision moving forward.
Our team of securities lawyers has represented numerous investors who have lost money due to alternative funds. At Meyer Wilson, we make it a priority to work for our clients, always focused on recovering their losses. If you have lost money, reach out to us for your complimentary consultationand see if we can help you.