Handling Client Complaints

May 5, 2011Articles Westlaw News & Insight Securities Blog

Notwithstanding the best client screening and communication with a client over the life of the relationship, financial advisers, like other professionals, are subject to customer complaints, either informal or formal. Handling a complaint properly at the earliest stages may mean the difference in the ultimate outcome. Although the firm's compliance manual should be the primary resource guide when faced with a complaint, there are some things that an adviser should and should not do when faced with a complaint.

All complaints should be handled in the same fashion. The advisor should immediately forward the complaint to those individuals who are designated to handle such matters, namely, a managing principal, compliance officer or legal department. Especially when dealing with a formal complaint, there will be a set deadline to respond. The failure to report a complaint in a timely manner may also jeopardize, among other things, available insurance coverage. Ignoring the complaint or treating it with therapeutic neglect will inevitably only make the situation worse.

The advisor should also never try to address the complaint on his or her own. All too often an advisor with a longstanding relationship with the now-complaining customer will try to take the matter into the advisor’s hands and try to resolve the dispute with the customer outside of proper company channels. Such conduct can be considered settling in the field, which will certainly run afoul of the firm compliance manual and only cause the advisor more problems.

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