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(Bill Grimshaw)
(Bill Grimshaw)

Adviser Complaints

One way to launch a complaint against your adviser Add to ...

The damage caused by bad investment advice in the bear market hasn't just fostered a rush to do-it-yourself investing.

Now, there's a DIY loss-recovery program, too. Robert Goldin, a consultant who specializes in helping wronged investors get their money back, has created a service that offers detailed guidance on how to launch your own complaint against an adviser.

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"This is for the man in the street who knows he's got a claim but doesn't have the financial resources either to go to a lawyer or go to a consultant who might charge several thousand dollars," Mr. Goldin said.

The idea here is that investors would use Mr. Goldin, a former securities lawyer who has 15 years experience as an investment dispute consultant, to coach them through the complaints process. The cost is $75 for the first interview with Mr. Goldin and $185 for each subsequent hour. Clients can use his guidance as much or as little as they want.

Care to launch a complaint on your own, without help? Here's how Mr. Goldin sees it going down.

"In nine cases out of 10, you file a letter of complaint to the brokerage house and they send a template letter back saying you're the bad guy, the investments were suitable, etc. People get intimidated and just go away."

Okay, what about a lawyer? The rule of thumb here is that your losses need to exceed $100,000 to make the legal fees economically worthwhile. The Ombudsman for Banking Services and Investments? It's free, but they're more like third-party fact finders over there, not advocates for you, the investor.

That leaves the arbitration service offered by the Investment Industry Regulatory Organization of Canada (IIROC), which can cost several thousand dollars to use, or the services of an investment dispute consultant like Mr. Goldin. He figures it can cost between $2,000 and $3,000 to work through a straightforward claim.

Now, investors have a new option in the DIY loss-recovery program, which is detailed on Mr. Goldin's website. As a taste of the kind of expertise he provides, Mr. Goldin lists 156 different grounds for launching a successful complaint (click where it says Financial adviser's fault ).

The list is exhaustive and exhausting to read. Who knew there were so many ways for advisers to drill their clients? Broadly speaking, many relate to the key issue of suitability, or the appropriateness of the investments you own for someone with your level of risk tolerance.

As a dispute consultant, the Thornhill, Ont.-based Mr. Goldin works only with people he can meet in person. But he said he's open to talking on the phone with people in other parts of the country who want help in pursuing complaints themselves and are willing to provide him with account documents.

Mr. Goldin said one of the first things he'll do for DIY complainants is help them decide if they have a legitimate case. In his experience, about 70 per cent of people who are angry about their losses have the stock market to blame, not their advisers.

He also offers guidance on how to prepare a letter of complaint, and on how much to claim in compensation. Mr. Goldin said he looks at how much a person had in their account and how much they lost and then knocks off about 20 per cent of any loss to reflect the natural risks of investing in the stock market.

Mr. Goldin also provides advice on how best to use the banking and investing ombudsman, which will investigate claims of up to $350,000. He said that in his experience, people being interviewed by the ombudsman's investigators can inadvertently disclose harmful information.

"People need to be prepped for the interview before they have it because they can actually put their foot in it and destroy their case," he said. "Meanwhile, the brokers, who are also interviewed, have been prepped by their compliance departments."

If you're planning to use IIROC's arbitration plan, Mr. Goldin can help you as well. He warns that arbitration is unpredictable, lacks the right of appeal and presents the risk that you could be asked to pay the legal costs of your investment firm if your complaint is dismissed.

The bear market that began a year ago has prompted many people to assess their relationships with their investment advisers. Many investors are no doubt concluding they're well served, while others are taking over their own accounts. The new account growth at online brokers highlights this trend.

Mr. Goldin said the number of people hiring him to get compensation for their losses is up, too. "Business has probably increased this year by 30 to 40 per cent over what it has been over the past few years."

 

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