5 Most Common Trading Broker Complaints

In an era of increasing financial security, from the gig economy to student debt, investing is an attractive way to create a nest egg. Online investing options have grown substantially. Unfortunately, investment scams have also increased recently, especially since the COVID-19 crisis started.  

Because of the number of investment scams, it is important to look carefully at broker reviews before signing up with one. Ensure they are regulated and have a solid reputation. If you have lost money to a problematic broker, consult with Trader Defense Advisory and our experts can get you started on the road to fund recovery. We have the experience, skill, and connections to pursue your claims and seek redress. 

The following are 5 common problems with trading accounts and brokers who manage them. Some are simple trading account problems, whereas others are more complicated and require the assistance of a fund recovery specialist, such as Trader Defense Advisory to help sort out.

1. Brokers are Overly Aggressive

Pushy people can be annoying. We may have to deal with a relative who asks nosy questions or spammy email marketers, but a pushy broker is also an intrusion. Brokers should definitely be enthusiastic about what they do and want to earn the best returns for their clients, but if they are overly aggressive, this can be a red flag. 

Getting a cold call from a broker is almost never a good sign. Most reputable brokers do not market their services on the phone anymore. Poor brokers may talk a lot about their credentials or their past investment successes rather than their philosophy of investing or their methods. Brokers who brag aggressively but provide little information are seldom reliable. 

If brokers push investments too forcefully, this could be an indication of a trading account problem. One common form of investment fraud is pump and dump, which occurs when a broker talks up an investment so many people will buy it and when it rises in value, the broker, who holds the investment will sell all of their holdings. This is one reason a broker should reveal how they are invested before making recommendations.

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2. Communication is Poor or Inconsistent

Communication is the essence of personal and work relationships, and the same is true of investing. A broker should disclose how they are invested so it is clear whether they are talking up or down an investment for their personal benefit. Additionally, all policies should be clearly stated in a terms and conditions contract and on their website. 

There should be no surprises such as hidden fees or policies that were not stated clearly ahead of time. Some unscrupulous brokers will try to disguise shady practices in inflated or obscure language on the back page of a contract. Ensure you understand every detail of a contract carefully before signing. 

One common trading account problem occurs when a broker seems friendly and helpful prior to signing up a client only to be unavailable once an account has been opened and funds have been sent. If a broker is suspiciously uncommunicative, that could be an indication of a trading account problem. They may be trying to make it harder for you to withdraw money or may not be trading your money at all. 

Another worrying sign is evasiveness when asked about the advantages of certain investments or strategies. A good broker should take the time to explain how your money is being invested, but if there is a feeling that the broker doesn’t want to go into details, that should be cause for concern.

3. Broker is Not Regulated

One of the most important things to look for in a broker is a license. This doesn’t apply to just any license. There are regulators that have higher standards and those that pretty much give a license to anyone who fills out an application and pays a fee. 

The first step is to check there is a license. Look at the license carefully and ensure it is up to date. Take the time to check with the regulator to confirm that the broker is still currently licensed. Also, take some time to investigate the regulator. Ask the following questions: 

  • What kind of governments are these regulators connected with? 
  • What requirements do they expect of licensees?
  • What kind of oversight does the regulator require? 
  • What are the penalties for non-compliance or wrongdoing?
  • Is there a clear way of filing a complaint against individual brokers with the regulator?

It is also helpful to see if there is press about the broker or the regulator to check any positive or negative news about them. If a regulator has taken action against brokers, that is a good sign that they demand accountability from those they license.

4. Broker Charges Unusual Fees

All fees should be clearly stated on the website, in the contract, and in communication with the client. If there is a fee that does not seem to be necessary or well-explained, ask the broker. If the brokerage does not explain the fee to you or acts evasive, that may be an indication of a trading account problem. 

It is normal for brokers to charge fees in the form of commission. That is how they make money. However, if there are many of these small fees that creep up without explanation, that could be a red flag. Unfortunately, many clients do not realize this until they already have entrusted funds with the broker and have already been charged. 

One of the most common fees that indicate a trading account problem is withdrawal fees. Most reputable brokers do not charge deposit or withdrawal fees, or if they do, the withdrawal fees are only for specific types of withdrawal methods not usually handled by the broker. If these fees are substantial, it may be a sign that the broker is problematic. 

One common type of fake fee is a made-up tax. The broker may say that he or she needs to charge a special fee to cover a tax specific to that region, but it is simply to make some extra money. If a broker claims this, it is easy enough to do an internet search to determine whether any such taxes are required in that area on trading account transactions.

5. Broker Will Not Execute Clients’ Requests

The last straw for many people and the clearest indication of trading account problems is a broker’s refusal to execute client requests or the tendency to make unauthorized transactions. If you see evidence of transactions you did not request, you should bring them to the broker’s attention and consider reporting them. Also, brokers may refuse to allow you to withdraw money or try to pressure you into making additional trades ostensibly to recoup losses. However, the result is usually more losses. 

People trade with brokers to act on their behalf, and when brokers refuse to do so or worse, make trades without their permission, they are working for themselves and not the client. If a broker does not think the client’s request is a good idea, they have the right to explain why, but to take actions contrary to their clients’ wishes is an indication of a serious trading account problem.

Do You have Broker Issues or Trading Account Problems? Contact Trader Defense Advisory

If you are concerned about a broker or are have trading account problems that point to a scam, contact Trader Defense Advisory right away. Our team has the experience, skill, and tools to advocate on your behalf and work through the fund recovery process. Our vast knowledge of the financial industry and understanding of how to file broker complaints will improve your chances of success in retrieving your funds.