A client has sent an email to their investment adviser representative (IAR) expressing dissatisfaction with recent portfolio performance and threatening to file a complaint with the state Administrator. The IAR, feeling personally attacked, drafts a quick response email defending their actions and implying the client is to blame for their own poor decisions. Before sending, the IAR's firm's compliance officer reviews the draft. What is the most appropriate action for the compliance officer to take?
- AAdvise the IAR to call the client immediately to resolve the issue verbally, as email trails can be problematic.
- BInstruct the IAR to ignore the client's email, as responding might escalate the situation further.
- CApprove the email after ensuring it includes a disclaimer that it is not an official communication from the firm.
- DRequire the IAR to revise the email to remove all defensive language and focus on a professional, empathetic response, while following firm complaint procedures.
Show answer & explanationAnswer & explanation
Correct answer: D. Require the IAR to revise the email to remove all defensive language and focus on a professional, empathetic response, while following firm complaint procedures.
When handling client complaints, it is crucial for IARs and their firms to maintain professionalism, empathy, and adhere to established complaint procedures. A defensive or blaming response is unethical and could exacerbate the situation, potentially leading to formal regulatory action. The compliance officer must ensure the response is professional and follows firm policy for complaints.
Why the other options are wrong
- A. While a phone call might be part of the resolution, it should supplement, not replace, a professional written response and adherence to complaint procedures, especially given the existing email communication.
- B. Ignoring a client complaint is unethical and unprofessional; all complaints must be addressed promptly and appropriately.
- C. A disclaimer does not absolve the firm or IAR of responsibility for unprofessional communication; a defensive email is inappropriate.
Handling Client Complaints (IAR)
IARs must respond to client complaints professionally, empathetically, and in accordance with firm procedures, avoiding defensive or blaming language.
- All complaints, written or verbal, must be documented.
- Responses should be timely, professional, and focus on resolution.
- Defensive or accusatory language is inappropriate and unethical.
Memory trick: Respond calmly and professionally, following the firm's complaint 'roadmap'.