As a former financial advisor and legal expert with over a decade of experience, I’ve seen my fair share of investor complaints and the consequences they can have for both investors and advisors. The recent complaint against Michael Tannery, a Richardson, Texas-based advisor with Independent Financial Group, is a prime example of the seriousness of such allegations and the importance of understanding the rules and regulations that govern the financial industry.
According to the complaint filed in January 2025, Mr. Tannery allegedly recommended unsuitable investments, including a non-traded REIT, resulting in damages of $150,000. While Mr. Tannery defends himself against the allegations, stating that an investigation did not find evidence to support them, the fact remains that unsuitable investment recommendations can have severe consequences for investors.
As a financial advisor, it’s crucial to understand and adhere to the rules set forth by regulatory bodies like FINRA. In this case, the allegation of unsuitable investments falls under FINRA Rule 2111, which requires advisors to have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer, based on the customer’s investment profile.
The Advisor’s Background and Broker-Dealer
Michael Tannery holds an impressive 36 years of securities industry experience and is currently registered as a broker and investment advisor with Independent Financial Group, doing business as Tannery Company. His credentials include passing seven securities industry qualifying exams, demonstrating his knowledge and expertise in various aspects of the financial sector.
However, it’s important to note that even experienced advisors can face complaints. In fact, a study by the North American Securities Administrators Association found that “one in five investors over the age of 65 has been the victim of financial fraud.” This highlights the need for investors to remain vigilant and for advisors to prioritize their clients’ best interests.
Understanding FINRA Rule 2111
FINRA Rule 2111, known as the “Suitability Rule,” requires financial advisors to make recommendations that are consistent with their customers’ best interests. This means taking into account factors such as the customer’s:
- Age
- Financial situation
- Risk tolerance
- Investment objectives
Advisors must also ensure that customers understand the risks associated with their investments and that the investments are appropriate for their financial goals.
Consequences and Lessons Learned
The consequences of unsuitable investment recommendations can be severe for both investors and advisors. Investors may face significant financial losses, while advisors can face disciplinary actions, fines, and even the loss of their licenses.
As an investor, it’s essential to do your due diligence when working with a financial advisor. This includes:
- Researching their background and qualifications
- Asking questions about their investment strategies and the risks involved
- Ensuring that you understand all aspects of your investments
For advisors, the lesson is clear: always prioritize your clients’ best interests and adhere to the rules and regulations set forth by governing bodies like FINRA. By doing so, you can help protect your clients’ financial well-being and maintain the integrity of the financial industry as a whole.
As the famous investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.” By staying informed, following the rules, and prioritizing our clients’ needs, we can work together to create a more transparent and trustworthy financial system for all.
