Reverse Churning

Reverse Churning

Reverse churning occurs when a financial advisor places a client’s money into a fee-based advisory account to rake in management fees and then performs little or no actual management from that point forward. Over the past decade many financial advisors have moved from commission based compensation to fee-based advisory accounts. If the financial advisor offered little, or no, on-going advice related to the account, the client may have a viable claim for reverse churning.