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Industry Spotlight > Broker Dealers

What Is The NASDR Trying To Tell Us?

By Staff Writer

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There are a number of lessons representatives and broker/dealers

can learn from the NASDRs regulations, notices and other communications.

For Representatives

*Evaluate both the investment aspects of the sale as well as the products relationship to customer needs and objectives.

*Assess a wide range of suitability factors, since it appears that over 20 have been identified.

*Document the information used to reach a recommendation and how the information was used.

*Disclose the basis for the recommendation and the products features, benefits and costs to the client.

For Broker/Dealers

*Develop specific suitability standards and then review all sales and transactions and scrutinize those that are exceptions to the broker/dealers standards.

*Special cases deserve heightened scrutiny; e.g., replacements, over age (senior), low income customers and qualified sales.

*Document how supervision was conducted, the actions taken to ensure suitability recommendations are provided and how the process was periodically monitored and evaluated.

*Provide representatives with training on suitability as well as tools and aids to help them properly assess suitability.

Reproduced from National Underwriter Life & Health/Financial Services Edition, May 20, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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