Alexander Cobb
June 2, 2022
Volatility in the investment markets is currently grabbing both media headlines and investor attention. As clients react to the uncertainty in their portfolios, the investment industry is expecting a concurrent increase in complaints. In an article in The Globe and Mail, journalist Brenda Bouw consults experts for insight into how the industry can prepare for this rise in complaints – particularly in the areas of investment suitability and communication. Among others, she turns to Alexander Cobb, a litigation partner in Osler’s Toronto office who often works with financial advisors.
“Nobody’s going to complain about being put into an inappropriate investment if it goes gangbusters, so you’re not going to see as many complaints when markets are doing well,” Alexander says. However, he explains that the “longer the period of uncertainty lasts, the more likely you are to start seeing a significant uptick in complaints.”
With market downturns, investors tend to question the suitability of their investments more often. Service issues are also common targets of client complaints – particularly as they relate to do-it-yourself (DIY) investment platforms. On the advisor side, the top complaints tend to relate to communications issues.
According to Alexander, investors may file a complaint against an advisor “not so much because they’ve done something wrong, but simply because they’re unhappy and looking for someone to blame.”
To prevent this, he suggests a proactive approach that focuses on clear, transparent and regular communications with clients about their portfolios – especially if markets fall.
“Even if a client is unhappy with the performance of their portfolio, if they understand why, then they’re much less likely to place the blame on their advisor,” he says.
Finally, Alexander recommends that advisors keep meticulous records: “Document the most innocuous communication and make it a habit to have regular touchpoints with your clients. Reach out to your clients and make sure they’re getting the advice they need – even if they haven’t asked for it.”
This article is behind a paywall. If you subscribe to The Globe and Mail, log in to read the full text of “How the investment industry can prepare for a rise in client complaints amid the market downturn” by Brenda Bouw, published on June 2, 2022.