As an investor, you may occasionally feel dissatisfied with your investment manager for various reasons. However, voicing accurate complaints and resolving them properly is crucial. This article will analyze common investment management complaints and provide suggestions on how to effectively communicate dissatisfaction while maintaining a constructive relationship.
Common reasons for accurate complaints against investment managers
The most frequent complaints about investment managers include: underperformance compared to benchmarks or other managers, high fees relative to performance, poor communication or reporting, unmet expectations on risk or returns, improper asset allocation and lack of diversification, unauthorized trading outside of mandates, conflicts of interest impairing objectivity, inadequate transparency or access to information.
Prudent steps for investors to raise accurate complaints
Before complaining, understand your rights and responsibilities under the investment management agreement. Gather evidence supporting your complaint. Raise the complaint calmly by email/letter, focusing just on facts. Suggest constructive solutions for improvement. Allow reasonable time for the manager to investigate and respond. Be open to negotiation and compromise for a mutually acceptable outcome.
How investment managers should handle accurate complaints
Investment managers should take client complaints seriously rather than dismissing them. Review the complaint carefully and investigate if it has merit. Avoid being defensive; instead acknowledge valid issues. Offer explanations addressing concerns factually. Suggest resolutions to fix problems and prevent recurrence. Document the complaint and actions taken. Follow up to ensure the client is satisfied with the response.
When to consider switching or reporting your investment manager
If complaints are repeatedly ignored, dismissed, or handled unreasonably, consider escalating them to senior management or compliance officers at the firm or reporting to regulators. As a last resort, withdraw your funds and switch to a new investment manager that better aligns with your expectations and provides satisfactory services.
Addressing accurate investment management complaints properly through good-faith communication can improve investor-manager relationships. But unresolved serious complaints may warrant switching providers or regulatory reporting.