How to Handle Client Complaints the Right Way

No adviser enjoys receiving a client complaint—but how your firm handles it speaks volumes about your professionalism, compliance culture, and commitment to fiduciary duty.

Properly managing client complaints isn’t just good business—it’s a regulatory expectation for Registered Investment Advisers (RIAs). Here's how to build a compliant, client-centered response process.

📣 What Qualifies as a Client Complaint?

A client complaint is any written or verbal expression of dissatisfaction about:

• Fees or billing 

• Performance or results 

• Miscommunication or lack of disclosure 

• Errors or delays in transactions 

• Perceived conflicts of interest 

• Misconduct by staff or affiliated parties

Even seemingly minor grievances can indicate deeper issues—and regulators want to see that you take them seriously.

📝 Key Steps in Handling Client Complaints

1. Acknowledge Promptly 

• Respond quickly and professionally, even if resolution takes time 

• Let the client know their concerns are being reviewed

2. Document Everything 

• Log the complaint’s date, source (email, call, in-person), and summary 

• Track all follow-ups, responses, and actions taken 

• Maintain a centralized complaint log for compliance and audit purposes

3. Investigate Thoroughly 

• Gather all facts, documents, and communications related to the issue 

• Interview relevant team members if needed 

• Involve compliance or legal personnel when appropriate

4. Respond Thoughtfully 

• Provide a clear and respectful explanation of your findings 

• Offer corrective action if warranted 

• Avoid defensive or dismissive language

5. Resolve and Follow Up 

• Implement any corrective measures 

• Confirm the client is satisfied with the resolution 

• Monitor for similar issues across other clients

6. Report as Needed 

• Disclose material complaints in Form ADV Part 2A 

• File a Form U4/U5 amendment if the issue involves a covered individual 

• Notify your E&O carrier if appropriate

⚠️ Compliance Best Practices

• Develop a formal Complaint Handling Policy 

• Train all staff to recognize, report, and route complaints 

• Review your complaint log periodically for trends and risks 

• Include complaints in your annual compliance review 

• Avoid promising outcomes or assigning blame prematurely

🤝 Turning Complaints into Opportunities

Handled correctly, complaints can build client loyalty and improve your services. They may:

• Reveal unclear disclosures or documentation gaps 

• Highlight service areas needing attention 

• Give you a chance to rebuild trust through transparency

Final Thoughts

No firm is immune to client complaints. What matters is how you respond—with professionalism, fairness, and a commitment to doing the right thing.

A strong complaint-handling process protects your clients, supports your compliance program, and helps turn feedback into growth.