Call Now For a Free Consultation:
(614) 502-6165

What Your Broker Should Be Doing to Prevent Overconcentration

A stockbroker fraud lawyer explains more about how brokers guard against overconcentration and what to do if you suspect stockbroker misconduct.

You trust your stockbroker to manage your portfolio well and take your financial needs and goals into consideration. Unfortunately, some unscrupulous brokers have been known to fail to diversify their clients’ portfolios, leaving them with an overconcentration of assets in investments that are too similar. Having too much invested in a particular security, financial sector, or industry puts you at a greater risk for losses, and this is generally considered poor portfolio management.

How Do Brokers Guard Against Overconcentration?

Your broker has a duty to avoid exposing you to the unnecessary risks inherent in overconcentration. Here are the two main tactics they generally use:

  • Diversification. Diversification is simply making sure that your investments are spread out so that they are not too dependent on the performance of a particular security or industry. In general, your broker should seek a variety of investment types to help protect your assets if something goes wrong within a certain sector.
  • Asset Allocation. Asset allocation is essentially balancing your financial needs and tolerance for risk with the risks or rewards of the investments chosen. For example, an investor with a higher risk tolerance may be fine with big investments in stocks or equities that would be inappropriate for an investor with a lower risk tolerance. Your broker should be sensitive to your needs and goals and allocate assets appropriately.

If you believe you have a claim against your broker or brokerage firm for overconcentration of your portfolio that led to losses, you are likely facing FINRA arbitration to resolve your dispute. A stockbroker fraud lawyer with Meyer Wilson would be happy to meet with you in a completely free legal consultation to discuss your situation and next steps toward recovery. Give our investment fraud lawyers a call today for more information.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

Share This Story
If you found the information provided by this article useful, consider sharing to your social media channels to help others in their search for reliable resources.
Consult with Our Legal Team
There is never a cost associated with a consultation
Columbus Office

614-224-6000
305 W. Nationwide Blvd
Columbus, OH 43215
Meyer Wilson
New Orleans Office

900 Camp Street 
Suite 337
New Orleans, LA 70130
Los Angeles Office

310-905-8688
2029 Century Park East,
Suite 400N
Los Angeles, CA 90067
Cleveland Office

216-600-1355
4781 Richmond Rd.
Suite 400
Warrensville Heights, OH 44128
Bloomfield Hills Office

248-817-8214
41000 Woodward Ave.,
Suite 350
Bloomfield Hills, MI 48304
Quick Links
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Read More
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram