During times of market turbulence, financial and investment advisors tend to see a rise in complaints from clients. In an interview with The Globe and Mail, partner and co-head of Torys’ securities defence practice Gillian Dingle offers insights into how advisors can protect their practice against these complaints during times of volatility.
While many investors will feel uneasy during any period of broad-based market uncertainty, Gillian said that complaints are more likely to come at a time when “there's a sector-specific decline in the markets.”
"When everybody is down, it's difficult for investors to view that as something that is the fault of their advisor," Gillian said. "Whereas if the market generally is stable but one particular area is down, it's easier for an investor to become concerned that that's because my advisor made an unsuitable investment decision for me."
The most common cause of complaints that Gillian handles relate to investment suitability, she said, particularly when investors claim they are more conservative than their advisor initially thought. This reinforces the importance of advisors getting to know their clients and rebalancing their portfolio appropriately when market performance results in overconcentration in a specific sector, she explained.
Gillian recommends that advisors time stamp their summaries of client discussions—either by emailing it to the client or to themselves—so they have proof that their notes weren’t “reverse engineered after a complaint was filed.”
“Clear notes are hugely helpful in suitability complaints for establishing – yes, they understood my recommendation, my recommendation was well-founded, and they agreed," she said.