FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationProfessional Conduct and Ethical ConsiderationsMedium
A client expresses dissatisfaction with their investment performance, stating they feel misled by the initial projections provided by their registered representative (RR). The client claims the RR guaranteed a specific return, which has not been met. The RR denies making any guarantees. What is the most appropriate action for the RR to take in this situation?
- AReview all documentation and communications with the client to verify what was discussed and report the complaint to the firm.
- BSuggest a meeting with a senior manager to explain that the client misunderstood the investment risks.
- CReassure the client that market fluctuations are normal and advise them to wait for a recovery.
- DOffer to adjust the client's portfolio to more aggressive investments to try and recoup losses quickly.
Show answer & explanationAnswer & explanation
Correct answer: A. Review all documentation and communications with the client to verify what was discussed and report the complaint to the firm.
Any client complaint alleging misrepresentation or specific issues must be taken seriously. The RR should review records and report the complaint to their firm, which has procedures for handling such matters, including investigating and resolving the issue.
Why the other options are wrong
- B. While a meeting might occur, the initial and most appropriate step is to review documentation and report the formal complaint to the firm, not to pre-emptively shift blame.
- C. This avoids addressing the core complaint of misrepresentation and potential rule violations.
- D. Changing investment strategy in response to a complaint, especially to more aggressive options, could exacerbate the problem and is not the appropriate first step for handling a complaint.
Handling Client Complaints
Registered representatives must promptly report all written and certain oral client complaints to their firm. The firm is responsible for investigating and resolving the complaint according to regulatory requirements.
- All written complaints must be reported.
- Certain oral complaints (e.g., alleging misconduct) must also be reported.
- Firm is responsible for investigation and resolution.
- Protects both client and firm.
Memory trick: Hear a Complaint, Document it Right, Report to Firm, Bring it to Light.