Case Studies

Market losses dash client's high hopes

The Dispute

Case study:
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From the Client's Perspective

Richard opened registered and non-registered investment accounts with RBC that suffered significant capital losses when the markets suffered a downturn. He claimed to be an inexperienced investor with a low tolerance for risk. In his view, he had received poor quality advice from his investment advisor whom he believed had placed his assets in high-risk securities. Richard felt RBC should discipline the investment advisor and compensate him for his losses. When RBC would do neither, he escalated the matter to the Ombudsman.

From RBC's perspective

RBC's documentation for Richard's account indicated that he was a growth-oriented investor with a long-term horizon and a moderate tolerance for risk. RBC believed the assets recommended by the investment advisor were in keeping with Richard's financial goals.

Also, RBC pointed out, the investment industry does not make a practice of compensating clients for capital losses due to market fluctuations.

The Outcome

The Ombudsman confirmed to Richard that at the time the accounts were opened, he received a Portfolio Proposal from the investment advisor based on his investment objectives.

Through the investigation, the Ombudsman determined that the investments had been researched professionally and offered in good faith. However, Richard's risk tolerance and expectations had changed with the declining market. Since Richard had previously agreed to the recommended portfolio and had not informed RBC of any changes, the Ombudsman could not support his request for compensation. Richard continued to believe he was not provided appropriate advice, and the case was closed with no agreement.

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