Managing your finances is somewhat like managing your baby. There are a lot of emotions and some science in this process. For most of us, the journey is mired with wrong decisions and missed opportunities which come back to stare at our face. It is a psychological process rather than a logical one, where the investor hears what he or she wants to hear and then makes a lot of decisions based on gut feel and hearsay from friends and acquaintances. In today’s world which is determined by the number of followers or the thumbs up icon, it is often difficult to sift shadows from substance. The advisors’ using their own frame of reference are known to change their advice based on the gender of the investor and their perception rather than the investor’s actual risk appetite. This becomes a minefield with a litany of issues that both clients’ and the institutions must deal with.
Matters of money are often matters of heart which are highly subjective and emotional
If you are an advisor, have you been accused of –
- Giving wrong advice; missing opportunities or triggers to sell?
As a client, have you felt –
- The advisor just does not ‘get your style’ or is misjudging your risk propensity?
- Due to a lack of understanding or tardiness on the part of your advisor you have lost money?
If the distress caused to the client is deep enough, it leads to soured relationships at best or litigation at worst. Remember, we are talking emotions here, not necessarily logic.
As a client, you may want to air your grievances and hopefully claw back some money from the financial institution.
As the advisor in such a position, your first step would be to ascertain that due diligence has been done. However even if protocol had been adhered to, you may come across to your client as someone who has not done the ‘right thing’.
Why is financial mediation important?
For the client, mediation offers the chance to have a proper hearing of all the issues and an amicable resolution of the matter. It is difficult and frustrating to take on a large institution in court and the formal dispute resolution process with its myriad of rules and rigid timelines can drain one psychologically and financially – particularly when you have already been hurt by investments that have gone south.
From the Institution’s perspective – banks and other financial institutions work on goodwill and reputation. A disgruntled client taking to mainstream or social media can work against them. Further, if these matters are not resolved in a timely manner, chances are quite a few will land up in the courts or dispute boards which take up a lot of organizational resources. Control over the outcome would no longer be in your hands. To add to this is the unwanted publicity that gets attached to court hearings.
The Finance Mediator
The need of the hour in such cases is to get a mediator who can serve as an unemotional 3rd person to disseminate objective viewpoints to both parties. Not just any mediator, but someone who not only has in-depth industry knowledge of banking and financial laws and regulations, but who also appreciates how the institutions operate and make decisions and how the client feels. Taking this to a new level, you will need someone who does not quote the rule book and is able to ascertain whether the dealings have been in line with market best practices. A professional who knows the products and market complexities and can see through the white noise to separate fact from fiction and the latter from emotion. All this and more by being able to explain this in lay person’s terms if needed.
Most finance and investment disputes can be settled in the privacy of a mediator’s office. The mediator will study the interests of both parties and help them reach an amicable resolution that saves time, money, and relationships. The work of the mediator in this matter goes far beyond just settling the case or client complaint.
Sage Mediation has onboard, mediators who are banking industry veterans to help you to resolve with empathy and understanding, and even help institutions setup a robust dispute resolution process. We have Hercules with a heart for hire.
Article written by:
Venky Narasiah
Senior Consultant
Picture sources for the feature image: Financial Times, The Wall Street Journal, The Straits Times, Lexology
