Break Away From The Pack

The pros and cons of arbitration in resolving financial disputes

On Behalf of | May 29, 2024 | Financial Industry Dispute Resolution |

In the fast-paced and complex world of finance, disputes are unfortunate yet inevitable. When disagreements arise, they can consume time, incur costs and ruin professional relationships.

One method of resolving such disputes is arbitration. If your breakaway firm is dealing with a dispute, how can you navigate its complexities and help your financial advisors and clients make informed decisions?

An alternative way

Among the forms of alternative dispute resolution is mediation. It involves an arbitrator, who is a neutral third party that makes a binding decision on a dispute. An arbitration often resolves disputes among brokers, financial advisors and their clients.

The arbitration process

Arbitration begins when a party files a claim with an arbitration forum, such as the Financial Industry Regulatory Authority (FINRA). Then, the parties will select an arbitrator and present their cases before the arbitrator makes a decision. The decision, known as an award, is binding and enforceable in court.


Arbitration offers some benefits over litigation. It is typically faster, less costly and less formal. Also, it allows the parties to agree on the arbitrator and specific rules of the proceedings. Additionally, an arbitration proceeding is a confidential process.


While arbitration has benefits, it also has drawbacks. First, arbitration awards are final and binding. In addition, the awards have limited rights to appeal. This means that if a party is unhappy with the outcome, they have few options for recourse.

Protecting your rights and interests

Putting an end to financial disputes is crucial not just for breakaway firms but for all registered financial advisory firms. With legal advice, you may consider your options and deal with the complexities of arbitration. Moreover, you may protect your rights, interests and financial well-being.