99 percent of the time the financial industry works the way we all want it to. Clients are well cared for by honest, capable professionals who really do want to see the client succeed.
But not always.
The reality is that sometimes clients get ripped off. Sometimes clients are lied to. Sometimes the trust that clients put in their financial institution or advisor is betrayed. It doesn’t happen a lot, but it does happen. The purpose of this column is talk about where you can turn if it happens to you.
And, while you are very unlikely to ever need this information, you might. The reason that this subject is on my mind is because I am on the verge of initiating an escalation on behalf of an aggrieved party against another firm.
For nine years I served on the Insurance Council of British Columbia, the provincial regulator for insurance activities in the province of BC. My main role was to serve on Investigative Review Committees. When there was an allegation of wrongdoing by an insurance agent, we were the people tasked with determining what happened, if it was offside, and what to do next.
When it was warranted, we would reprimand people, prescribe remedial education, levy fines, or even end their careers. I have also appeared as an expert witness in court cases, testifying on behalf of clients when financial advisors do bad, bad things.
I mention my background so that you know that I have no hesitation in going after bad advisors. Having said that, the first thing I am going to tell you is that most things – even if they really, really piss you off – are not the type of issues that get escalated.
I understand that it is irritating if your mail is going to the wrong address even after you told your advisor about this over and over, or you told your advisor you wanted growth from your portfolio over the long term and now you are down five percent, or the waiting time on hold is unacceptably long before the call center answers the phone. Sort it out. These are solvable problems.
It is not your anger or disappointment that merits escalation. Put your emotions aside. The types of things you may consider escalating involve matters of suitability, competence, ethics, and breaking the law.
Normal market volatility is not misconduct. If markets decline and your diversified portfolio falls with them, that is part of investing. But if the investments themselves were unsuitable or misrepresented, that’s a different story.
Regulators exist for serious issues involving public protection. Illegal activity sits at the top of the list. But if you are materially worse off because of someone’s actions or inaction, that also may merit escalation. If you were placed into investments that were clearly inappropriate for your situation. Or if your instructions were ignored. Or if professional standards were breached. These are the kind of things where escalation may be the right option.
So, reminding readers that 99 percent of the time things work the way we all want them to, and that not everything that pisses you off warrants escalation, here is what you can do if you something bad happens to you.
The first thing to do is to talk to your advisor. Even if they are the one that caused the mistake in the first place, they may be one that can quickly find the solution. If you can get a fast, painless resolution instead of going nuclear, that might save you a lot of time and further aggravation.
If that doesn’t work, its time to talk to the financial institution. Every investment dealer, insurance agency, and advisory firm has a compliance department. If you believe something has gone wrong, document your concerns and submit them in writing. Ask for a formal response. Compliance departments are obligated to take a client complaint seriously, and the last thing that they want is for this to escalate further. Many issues resolve at this stage. Skipping this step and going straight to a regulator is often premature.
If you can’t make any progress with the financial institution, its time to get out the big guns. Financial services are a heavily regulated industry, and there are a number of allies that you can enlist if your think you have been a victim of misconduct, incompetence, or an ethical breach. If you get to this point, then it is probably time to consult with a knowledgeable advocate because things are about to get real serious.
Chances are very good that you will never need this information. But if you do, now you know.
Brad Brain. CFP, R.F.P., CIM, TEP is a Certified Financial Planner in Fort St John, BC. This material is prepared for general circulation and may not reflect your individual financial circumstances. Brad can be reached at www.bradbrainfinancial.com.
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