Across every industry, customer satisfaction remains a top priority for a company’s success and longevity. Customer complaints can have a substantial impact on the reputation of a business, as a negative review can deter other potential customers from purchasing products or enlisting services. Professionals in the investment and financial industries also strive to keep their reputations as upstanding as possible. Unfortunately, client complaints can jeopardize a financial advisor’s career and reputation. Unresolved customer complaints can lead to litigation and regulatory implications and reputational risks, creating long-term challenges for these professionals and their associated firms. It’s important to establish and implement a proactive complaint response strategy that can be deployed smoothly and effectively at the first hint of any issues.
If you or your firm is struggling with a customer complaint that is threatening your professional reputation, consider enlisting the services of a highly experienced and trusted securities attorney who defends customer complaints
FINRA and SEC complaint response attorney who can help you identify the most strategic course of action. Together, you can review every detail of your situation and determine the steps you need to take to obtain a fair and favorable outcome. Let’s take a closer look at some of the current best practices for handling client complaints and how to strategically respond to client complaints as soon as possible.
Most Common Causes of Customer Complaints
Clients can lodge complaints against financial advisors for any number of reasons. Below are six (6) of the most common sources of complaints made against financial advisors. financial firms and their associated persons.
1. Misrepresentation or Omission of Material Facts
Clients trust that their financial advisors will act in good faith and uphold their fiduciary obligations to the customers they serve. However, if clients feel a financial advisor is not being transparent or honest about elements of the transaction, they may file a complaint. For instance, a client may allege that they were not fully informed about the risks or the fees associated with a specific investment, which will trigger them to file a complaint with the advisor, or the advisor’s associated broker-dealer or investment adviser, and possibly with a regulatory body.
2. Unsuitable Investment Recommendations
If a customer believes that the financial advisor failed to place them in an investment that met their risk tolerance, financial goals, time horizon and/or income needs, it is likely that the client would allege that an unsuitable investment was made, particularly if the financial advisor acted contrary to the client’s wishes. Other complaints may stem from clients who think that their adviser neglected to take the time to fully understand their goals.
3. Excessive Trading or Unauthorized Transactions
When a client trusts a financial advisor with transacting in their funds, they want to know that this professional will act according to the client’s best interests and not take unnecessary risks without the client’s consent. If a customer suspects that their financial advisor engaged in excessive trading practices or conducted unauthorized transactions, they may file a complaint against the financial advisor, and likely, that advisor’s associated broker-dealer or investment adviser, and possibly report the complaint to a regulatory body.
4. Poor Communication or Lack of Transparency
As professionals in the financial services industry know, clear and transparent communication is a critical component of building trust. Whenever a client feels “out of the loop” with their financial advisor, this can cause considerable concern and distress. For instance, clients may accuse the financial adviser of taking too long to respond to the client’s calls or instructions, or fail to actively listen to understand the client’s concerns, or neglect to keep the client informed of material information related to the client’s portfolio or account. This feeling of uncertainty can lead to a customer complaint.
5. Breach of Fiduciary Duty
Financial advisors have a fiduciary duty to uphold and protect the client’s best interests and to avoid or mitigate conflicts of interest at all times. A customer may allege an advisor’s breach of fiduciary duty when they do not act with due care or put the client’s interests first, ahead of the financial advisor and his/her firm.
6. Standards of Commercial Honor and Principles of Trade
Broker-dealers have an obligation to honor the standards of commercial honor and the principles of trade. That is, broker-dealers, and registered representatives associated with a broker-dealer must serve their clients with good faith and fair dealing, honesty, transparency and integrity. Should a broker-dealer or those associated with a broker-dealer fail to uphold these ethical and professional guidelines, , such as mishandling client funds or misleading clients about investment risks, they can be held liable for such conduct under FINRA Rule 2010.
How Firms and Financial Advisors Should Respond to Customer Complaints
Learning that a client has lodged a complaint against you can be an understandably upsetting experience. However, there are certain steps you can take to craft a response to the complaint which addresses the matter with professionalism and seeks to resolve the issue as efficiently as possible. With a knowledgeable and experienced
securities lawyer by your side, you can move forward with greater understanding and confidence. Here are some strategies for how to respond to client complaints, should they arise.
Take Every Complaint Seriously
Even if you believe the client’s complaint is baseless or frivolous, it’s essential that you treat it seriously. Any complaint can trigger a regulatory investigation by the SEC, FINRA, or other regulatory body. As you move through the investigation or enforcement process, be sure to avoid dismissing the seriousness of this matter or coming across as uncooperative, disrespectful, or hostile. When you approach the process with poise, it’s more likely that the proceedings will move forward more smoothly and efficiently.
Respond Promptly and Professionally
As soon as you receive a complaint or a notification of a regulatory inquiry about a customer, it is important to contact an experienced
securities attorney to discuss how to respond. Whether you are facing accusations of investment-related misconduct or fiduciary duty violations, it’s important to respond promptly and respectfully. Your attorney can help youdrafting and preparing any documents that can help to mitigate risks and avoid escalation.
Report When Required
The financial industry is governed by strict reporting obligations, so it’s essential to uphold these responsibilities. Failure to do so could result in investigations or enforcement actions. Keep clear records of the complaint itself, the details of the investigations, and how you responded. Keep relevant records to substantiate your position and document what internal controls have changed (if applicable) as a result of the customer complaint. Be sure to consult with counsel related to potential disclosures that will need to be reported on your Form U4, and potentially Form ADV and the timeline to make these disclosures.
Learn More About Jacko Law Group’s Customer Complaint Support Today
Enlisting the guidance of a
regulatory compliance attorney can help to mitigate your exposure and other professional complications. Together, you and your trusted legal advisor can discuss ways to establish preventative measures to reduce the likelihood of future complaints, such as implementing clear client communication protocols, frequently updating suitability forms, conducting training on customer complaint handling with financial advisers, and incorporating compliance monitoring tools.
At
Jacko Law Group, PC, our highly qualified and experienced attorneys are ready to support you and address customer complaints on your behalf. For more information, please call us today at (619) 298-2880 to get started with a trusted and knowledgeable securities attorney.
