My mom is a 53 year old widow who is unemployed. Her Financial Advisor put her in all JUNK bonds back in 2007 and 2008 (they were Junk bonds when the FA bought them and really junk now). My mom has several emails telling the FA that she wants to be conservative and she emailed her several times asking her if the bonds were risky? The FA told her in person that bonds don't default and if they do you get your money back. Does my mom have a case against the FA and the broker? My mom is a nurse and doesn't understand financial markets but did make it clear that she wanted to be conservative because she has to live off of her principle for the rest of her life. Thank you for your help!
The FA put about 60% of the money into the junk bonds and the rest was in an actively managed account that consisted of 70/30 equities and bonds. I don't really have a problem with the actively managed account because it's listed as conservative, but buying junk bonds for a conservative investor seems negligent at the very least. She wasn't even getting a good return on the junk bonds, something like 6.4%. We are talking about GMAC, FORD and Harrahs purchased in late 2007 and early 2008.
The FA put about 60% of the money into the junk bonds and the rest was in an actively managed account that consisted of 70/30 equities and bonds. I don't really have a problem with the actively managed account because it's listed as conservative, but buying junk bonds for a conservative investor seems negligent at the very least. She wasn't even getting a good return on the junk bonds, something like 6.4%. We are talking about GMAC, FORD and Harrahs purchased in late 2007 and early 2008.
