On the surface, it is tempting to compare investing in the stock market to gambling in Las Vegas. The chief difference, however, is this: When you do business with a major brokerage firm, you are paying them, in part, to evaluate your risk tolerance and make sure that your money is invested in a manner consistent with that level of risk. (A twenty-two year old college graduate will probably have a different level of risk than a retiree on a fixed income.)

Along these lines, the great majority of people who lose money in the stock market are accountable, largely, for their own losses, and when they file claims to recover they are not successful. On the other hand, it is the broker’s (advisor’s/consultant’s) job to help a client make fully informed decisions, again in a manner consistent with his/her risk tolerance. Investors who are able to show that their money was not invested in such a manner are more likely to be successful filing a claim to recover.

If the value of an account you held at a brokerage firm decreased substantially, and you feel that this decrease was not the result of a fully informed decision made by yourself, or you feel that your investments were not suitable for your account, you may file a claim to recover. Normally, this involves going to Arbitration. (Check your brokerage firm’s account opening paperwork for the “Arbitration Clause”). Arbitration is a little less formal than a normal legal hearing or trial. The decision maker is either one person, an arbitrator, or a panel of arbitrators. This panel will listen to your claim, as well as the defense presented by the brokerage firm and subsequently make a decision on the merits of your claim.

In the time leading up to an arbitration, both sides may agree to Mediation. Mediation is less adversarial than arbitration, and as it is voluntary, the stated goal is to reach a compromise.

With these briefly discussed concepts in mind, recognize that you alone are the captain of your ship, and a penny saved is indeed a penny earned. (Be careful with your money.)