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First Time Customer Complaints

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Jul 31, 2009 4:24 pm

Based on the stories I have heard, first time complaints can be debilitating–some advisors have even ruined their careers after becoming obsessed with vindicating their good name.

FINRA’s new dispute resolution statistics show arbitrations are up sharply this year, roughly 82 percent compared to last year. FINRA estimates there will be 7,750 cases filed this year, reaching levels not seen since 2004, following the fallout of the dot come bubble bursting. FINRA does not trace whether filings this year were primarily from the terrible run most investors had last year, mainly becasue a statement of claim can date back 6 years. It suffices to be enough of an indication that many advisors will recieve customer complaints, many for the first time.

Have you (or do you know a fellow advisor) who recieved their first customer complaint this year? What were the circumstances?

Jul 31, 2009 4:29 pm

I personally know three advisors who got their first complaint (all 3 were dismissed)

  1) Client claimed he was told mutual fund was insured and could never go down in value. 2) Client claimed he wasn't informed that VA had surrender charges. 3) Client didn't know that corporate bond had any risk.   All 3 claims were dismissed because of the signed disclosure forms.
Jul 31, 2009 5:14 pm

FINRA’s new commercials will lead to a HUGE increase in this BS

Jul 31, 2009 8:53 pm

I got my first two complaints this year 2 days apart from each other.  I was very happy when I saw the complaints because I had more than enough documentation.

  1. Client was offended that I tried overcoming her original objection against buying disability insurance, and didn't think it was professional that I try to sell a 26 year old female w/no DI through her job an individual policy.  Also angry about the $8,000 of B shares I sold her 3 years ago.  She took it to my RP and when I showed him meeting notes and signed mutual fund disclosure form and it was promptly dismissed. 2. Client complaining against me for his VUL lapsing.  He was sold the policy 7 years ago by an advisor from another part of the country and shouldn't have even had the policy in the 1st place.  I told him to reduce the coverage and let the cash value pay for the insurance until it runs out and then get a term policy.  Not only did the client not remember that conversation but he never got the term policy.  Showed the meeting notes and signed insurance change form to the RP and it was promptly dismissed. 
Aug 1, 2009 2:19 pm

[quote=BioFreeze] Almost a decade of selling VA’s and Index Annuities and no complaints. Thanks for asking, though.


This is a forum for registered reps…not insurance peddlers…

Aug 2, 2009 1:52 pm

I know a guy 20 years in never a complain until recently he got two from 1 person about their ARS and MARS.

  Wouldn't surprise me if there was a rash of them that come in about FNM.T FNM.S as the underwriter didn't have accurate info. Even that's not the fault of the underwriters but the client has a good argument saying they SHOULD HAVE known.   JMHO.
Aug 2, 2009 1:58 pm

Complaints mean money to FINRA.  FINRA is not on the side of the rep.

  I've never had a complaint.  I never will have a legitimate complaint of me doing something that isn't in the client's best interest.  I will absolutely have a complaint(s) against me in the future.  All of my files are documented with the assumption that the client will lodge a complaint against me.  Documentation is our only possibility of saving ourselves in a system in which the regulators just want our money and our employers and/or B/Ds just care about covering their own behinds.
Aug 3, 2009 4:40 pm

[quote=BioFreeze]Almost a decade of selling VA’s and Index Annuities and no complaints. Thanks for asking, though. 

Cool, the CDSC should be expiring on a couple of those soon.

Aug 4, 2009 1:37 pm

The SEC recently approved amendments to forms U4 and U5, which make significant changes to disclosure questions on the forms including allegations against registered reps in an arbitration or litigation in which the registered person is NOT a named party. (see here, affective May 18,

An interesting twist to this is that even with this new rule, (experienced and smart) claimant’s counsel STILL are intentionally NOT naming advisors in the hopes of trying to exact a greater settlement by having the advisor cooperate with them. It also creates greater leverage to threaten respondents counsel with “naming the broker” since with this new rule, once the brokers been named it will go on their personal record and will no longer come off after 24 months. Wonder if any of you have any experience or thoughts on this?