Financial Loss Recovery Group - Article 2

Complaints to the Financial Advisor

You have lost much of the value of your investment holdings and you complain to your financial advisor. The advisor passes you off to the supervisor. The supervisor passes you off to the compliance department. The compliance department asks for you to put your complaint in writing. What do you do?

Investors do not understand that everything that they say can and will be used against them in a court of law. Investors should be warned that their interests can be seriously prejudiced in this process. Unfortunately, investors realize much too late that the advisors and their employers are far better able to present the facts of the story in a bullet-proof fashion. Any misstatement by the investor undermines the client’s case.

Anything the investor says will bring about an answer. Anything the investor does not say will be raised as an issue because the investor obviously did not have any complaint about the subject not raised.

As examples:

• If the investor complains about the advisor’s failure to obey instructions, the compliance department points out that there was no issue about suitability.

• If the investor complains about the unsuitability of a particular investment, the compliance department points out that the amount of the investment was small relative to the overall portfolio.

• If the investor complains about the recommendation to use borrowed funds, the compliance department points out that the advice really came from the lender and not from the financial advisor.

The compliance department is not independent. The institutional ombudsperson is not independent. Both are branches of the financial advisory firm and have a primary objective of contributing to the profitability of the financial advisory firm. Once the complaint is made, the client becomes "Them" in the "Us vs. Them” conflict.

To protect yourself, do not put your complaints into writing without the assistance of someone conversant with the issues. By all means make your complaint, but ensure that it does not come back to haunt you. Further, make the complaint to someone who can do something about the problem - either the regulator or a court of law.

For assistance with your case, please contact John Hollander or Harold Geller at the Financial Loss Recovery Group of Doucet McBride LLP.

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