A case of miscommunication between broker and client

A misinformed sale 

Serena wanted to sell her shares in Capital Capital. She instructed her broker, John, to sell the shares, unaware that Capital Capital was scheduled to declare a dividend payment in the next few weeks. 

Serena was disappointed when she found out that she had missed out on a $500 dividend. She complained to John, arguing that John should have told her the dividend payment was near. Serena said would not have sold her shares in Capital Capital, had she known a dividend was about to be paid. 

John argued that Serena knew that Capital Capital always paid its dividends at that time of year: Serena had held Capital Capital shares for a long time.   

 

FSCL’s review 

Serena was 81 years old, in a poor state of health, and did not have a very high level of financial literacy. It was not reasonable, in FSCL’s view, for John to assume that Serena was on top of her financial affairs in these circumstances. 

FSCL was satisfied that Serena did not realise the divided was about to be declared, and if Serena had known of the declaration she would not have sold the shares until after the dividend was paid. 

FSCL suggested that John make a good will offer to Serena, of half of the expected dividend ($250). John agreed, and Serena accepted the offer. 

A speedy settlement prevented undue time and expense being spent on the complaint. The case took only a few weeks to resolve and both parties were pleased with the outcome. 

A note for financial advisers: knowing your client and tailoring your service to suit your client’s particular needs, is especially important where the client’s age and health could impact their ability to understand your advice.