My First Complaint -Need Advice

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Apr 16, 2009 12:53 am

Been in the business since 2002 , I received my first client complaint and would like some feedback .


 
1. Complaint was from a client from my previous firm
2. I opened the account in Feb 2005 and left the firm in May 2005
3. 32 yo risk tolerance was avg
4. Placed her in a balanced fund
5. Client says that she wanted something that would not lose money
6. I gave her the prospectus and brochure for the fund.
 
My old firm is requesting I send them a letter to them by 04-22-09 per FINRA
 
This was so long ago any ideas what I need to reply with ?
 
Thanks
Apr 16, 2009 2:20 am

For what it's worth, a guy helped me when I was new. I always wanted to do the right thing, and survive. It was a good lesson: be aggressive about this complaint.

 
Dear Old Firm:
 
I'm working from memory as I left my files with you. I recall the client was about age 32, the risk tolerance was determined to be moderate. Client stated she wanted growth, and growth with income. Her time frame for the investment was over 11 years, she had an adequate cash reserve in addition to the investment.
 
The complaint says she wanted something that would not lose money. In fact, we discussed the type of market volatility that could be expected from a moderate risk profile, that is, a portfolio invested in a little over half stocks and the rest bonds.
 
We discussed the risk of investing in stocks, and the fact that sometimes the case both stocks and bonds can decline in value, which was the case after 9/11, when the markets went into a freefall following the uncertainty of a new world, where global terrorism was a new phoenomenon.
 
And, we talked about the dangers of inflation, and how ownership of things like stocks, her home, even bonds, as opposed to "lending" in money markets and CDs, could help her keep up with inflation.
 
We explored the option of keeping all of the money in money markets or CDs, or placing all of the money in stocks.
 
The little vamp's eyes lit up at the prospect of walking the "Middle Road".  Surely a balanced fund could meet her desire to be "moderate". I can't really remember, but I think this was before the time that the little pervert Spitzer lost his credibility in making a career by attacking this industry.
 
Your honor, I now realize that selling this person a crappy little balanced fund and helping her with some big picture personal finanicial planning considerations was probably wrong. I did of course give her a prospectus, explain all of the fees and compliance issues surrounding my efforts to protect her from the alternative - facing the annuity sales woman at the bank, or calling ScottTrade for day trading procedural advice.
 
Bottom line, I'm not really giving people advice any more. I just give them what they want. You want a fixed annuity when the market is down, why not? Hey, if the market is going up, consider stocks, but it's up to you. You know that nice lady that's running FINRA, does she have a problem with ETFs in a wrap account? When you find out the answer, let me know.
 
When I think of limited partnerships, I see handcuffs. 12b1 fees, handcuffs. Loads, handcuffs. Wrap accounts, handcuffs. Advice, handcuffs. Better get free of a broker dealer and go RIA. Stay with a b/d for protection. Make sure you document the research on the index ETF you sold. Good luck getting all the requirements in on that insurance policy you "sold", and getting it underwritten. Wait, let me work harder and earn more money, so I can pay the taxes to pay your government employee salary and benefits.
 
Sorry, was that the good looking  32 year old lady, or the one that one that took about six hours of my time in three different meeting to get that crappy "sale"? Sorry, hey FINRA, kiss my a**, this is still America, and I just wrote a huge check to the IRS today.
 
Sincererly, Joe Broker.
 
Apr 16, 2009 9:41 am

I would try and remember as many details as possible and put them in the letter.  The key here is doucmentation.

Apr 16, 2009 9:54 am
radernation-1:

Been in the business since 2002 , I received my first client complaint and would like some feedback .

 
1. Complaint was from a client from my previous firm
2. I opened the account in Feb 2005 and left the firm in May 2005
3. 32 yo risk tolerance was avg
4. Placed her in a balanced fund
5. Client says that she wanted something that would not lose money
6. I gave her the prospectus and brochure for the fund.
 
My old firm is requesting I send them a letter to them by 04-22-09 per FINRA
 
This was so long ago any ideas what I need to reply with ?
 
Thanks



She wanted something that would not lose money and you put her money in the stock market? What page of the prospectus told you that she wouldn't lose money?

Apr 16, 2009 9:58 am
Mishigun:

For what it's worth, a guy helped me when I was new. I always wanted to do the right thing, and survive. It was a good lesson: be aggressive about this complaint.

 
Dear Old Firm:
 
I'm working from memory as I left my files with you. I recall the client was about age 32, the risk tolerance was determined to be moderate. Client stated she wanted growth, and growth with income. Her time frame for the investment was over 11 years, she had an adequate cash reserve in addition to the investment.
 
The complaint says she wanted something that would not lose money. In fact, we discussed the type of market volatility that could be expected from a moderate risk profile, that is, a portfolio invested in a little over half stocks and the rest bonds.
 
We discussed the risk of investing in stocks, and the fact that sometimes the case both stocks and bonds can decline in value, which was the case after 9/11, when the markets went into a freefall following the uncertainty of a new world, where global terrorism was a new phoenomenon.
 
And, we talked about the dangers of inflation, and how ownership of things like stocks, her home, even bonds, as opposed to "lending" in money markets and CDs, could help her keep up with inflation.
 
We explored the option of keeping all of the money in money markets or CDs, or placing all of the money in stocks.
 
The little vamp's eyes lit up at the prospect of walking the "Middle Road".  Surely a balanced fund could meet her desire to be "moderate". I can't really remember, but I think this was before the time that the little pervert Spitzer lost his credibility in making a career by attacking this industry.
 
Your honor, I now realize that selling this person a crappy little balanced fund and helping her with some big picture personal finanicial planning considerations was probably wrong. I did of course give her a prospectus, explain all of the fees and compliance issues surrounding my efforts to protect her from the alternative - facing the annuity sales woman at the bank, or calling ScottTrade for day trading procedural advice.
 
Bottom line, I'm not really giving people advice any more. I just give them what they want. You want a fixed annuity when the market is down, why not? Hey, if the market is going up, consider stocks, but it's up to you. You know that nice lady that's running FINRA, does she have a problem with ETFs in a wrap account? When you find out the answer, let me know.
 
When I think of limited partnerships, I see handcuffs. 12b1 fees, handcuffs. Loads, handcuffs. Wrap accounts, handcuffs. Advice, handcuffs. Better get free of a broker dealer and go RIA. Stay with a b/d for protection. Make sure you document the research on the index ETF you sold. Good luck getting all the requirements in on that insurance policy you "sold", and getting it underwritten. Wait, let me work harder and earn more money, so I can pay the taxes to pay your government employee salary and benefits.
 
Sorry, was that the good looking  32 year old lady, or the one that one that took about six hours of my time in three different meeting to get that crappy "sale"? Sorry, hey FINRA, kiss my a**, this is still America, and I just wrote a huge check to the IRS today.
 
Sincererly, Joe Broker.
 




I'm glad that you were able to find someone who could teach you to lie, in writing.

Apr 16, 2009 11:46 am

"Client says she wanted something that would not lose money".


 
HAAIC, whadu I know, but I'm guessing you're not one of the brightest pictels on the screen here.
Apr 16, 2009 12:47 pm

Point of clarification - did she tell you in 2005 that she didn't want to lose any money, or as a part of her complaint now is she alledging that she said she wanted something that wouldn't lose money? 



If it's the former, your case is done.  If it's the latter, to bad for her. 


I don't think this will be the only case among us like this.  Clients "remember" a lot of things when they lose money. 

Apr 16, 2009 1:07 pm
 
This is a time of (mental)  mediocrity, and we gotta stick together and we must fight back. Rader, just don't take any s*** from anyone about this. (Including your thinking self.) Every one of my clients gets the same risk tolerance discussion, and I'm sure yours do and did too. For all you know, some moron has tampered with the file you left behind. Confidently lay out your "typical" risk discussion in the letter in a friendly way, hold your head high.
Apr 17, 2009 9:00 am
Mishigun:

"Client says she wanted something that would not lose money".

 
HAAIC, whadu I know, but I'm guessing you're not one of the brightest pictels on the screen here.



I think you'd be surprised.

Apr 17, 2009 11:48 am

Is the fund worth less now than it was in 2002? If so, she didn't lose any money.

Apr 17, 2009 11:49 am
Bank of Amerrill:

Is the fund worth less now than it was in 2002? If so, she didn't lose any money.





I meant 2005

Apr 17, 2009 10:52 pm

Yes the fund is worth less than 2005 .

Apr 17, 2009 10:54 pm

She is alleging she said she did not want to lose money

Apr 17, 2009 10:57 pm

Misigan,

Thanks for the pick me up the thing that sucks is that she was a walk in that day and I happened to be the "broker of the day "  .
 
If I  mispelled your name I apologize, I just got in from Happy Hour
Apr 19, 2009 9:07 am

Bring this up to your current manager asap.    

Do not do anything until you do this.

Apr 19, 2009 11:57 pm

I had one of these last year--same thing -- former firm ect....only my guy was a complaint about me selling him a AAA rated insured muni that went down in value!  I wrote my letter and told it as it is---the client did not drop the complaint....but my former firm (Edward Jones) agreed with me....then FINRA required me to respond---I did!  FINRA did not go any further with it---the client did not pursue the issue.  Bottom line is: because the amount of the complaint was 25,000 +  .... it is still on my broker check!

 
Apr 20, 2009 12:31 pm
radernation-1:

She is alleging she said she did not want to lose money





Then why did she come to you and not a bank for a CD. Nobody wants to lose money but if you are in the stock market its a reality of life that at some point your holdings may go down. She never should have invested. Its her own fault for being dillusional.

Jun 4, 2009 11:53 pm

HAAIC,

Perhaps your reading comprehension skills aren't up to par with everyone else on this forum, but to summarize...



The story was about an investor who issued a complaint and cited DURING the complaint that she didn't want to lose money. Apparently you are not a financial advisor since you don't recognize the emotional baggage that often accompanies working with retail investors. Selective memory on the client's behalf is quite interesting even when the advisor does EVERYTHING the right way.

Jun 18, 2009 12:50 am

So over the past 4 years did she ever get a statement?  (I'm guessing about 48 of them)  What about updated prospectuses?  (I'm guessing 4)  Did the value of the account ever go up?  (I'm guessing it was going well in 2005 & 2006)



How could she possibly win this case?  I would think common sense would kick in at some point.  I also bet there would be no complaint if the fund was up.  People need to take responsibility for their own actions.