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Dealing With A Problem ClientFrom the October, 1998 issue of Registered Representative magazine Most brokers have to face grumbling customers from time to time. But what do you do if the grumbling persists? Use common sense. There are some basic steps you can use to keep your dealings with a problem client more agreeable. You’re probably doing many of these things every day as a salesperson, but they can also prevent a molehill of a problem with a customer from becoming a regulatory mountain. Consider these three procedures: Don’t hide from the customer. Medical malpractice risk-prevention experts often remind physicians that the quality of communication with a patient after an unfavorable outcome is the most important factor in determining whether a malpractice claim will be filed. Financial professionals can follow the same advice. Bungled executions and misdirected payments may be inevitable. Make sure you tell the client that the problem should never have happened and that you’re taking responsibility for fixing it at your own expense. Buck-passing order-takers become customer targets. Proactive, responsive brokers who don’t go into hiding when things go awry be- come customer heroes. If you don’t understand what the customer wants, find a new customer. Don’t think you’re in a safe haven against complaints when a customer brings you an unsolicited order to execute, especially if it is a complex trading strategy he or she asks you to carry out. That customer may tell a different story to your management and an arbitration panel after substantial losses are incurred. The customer can turn the “know your customer” and “suitability” rules of the SROs against you. These rules can become the basis for a claim that you should have stopped the customer from carrying out his or her own ideas. If you don’t understand the customer’s trading rationale or the instruments he or she wants to use, you may be better off advising the customer to find another broker, or to use an electronic trading service. Losing a customer in the short run may be far better than finding out that executing “unsolicited” trades and monitoring losses can put your own career at risk. Keep management in the loop. You may not always agree with the compliance department’s orders, and you may see yourself as a customer’s advocate when commission, fee or margin disputes arise. However, if you smell trouble down the road, it’s best to seek management’s help be- fore a customer’s written complaint goes into your permanent file. It never hurts to have your boss hear your side of the story first and assist you in putting out the fire. Moreover, the fact that management approved your efforts to solve a problem informally will an arbitration panel than the boss being cross-examined about why your actions differ from the firm’s compliance manual. Getting your boss in the picture at the earliest possible stage may be the best way to avoid fighting a two-front war if a battle with a customer becomes inevitable. This is an imperfect world, and no broker will escape customers who are (or become) problems. Keeping one step ahead of these problem customers can prevent long-term damage to your career. Reprinted with permission of Registered Representative magazine Copyright ©2000-01 Edward R. Wiest, P.C. This Page Was Last Modified on
04 December 2002
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