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Regulation and Compliance > State Regulation

How Management Can Help Agents With Compliance

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Agents often feel overwhelmed by the requirements of being in compliance with the rules and regulations of the states in which they are licensed, the Securities and Exchange Commission, the National Association of Securities Dealers, and the companies with which they have selling agreements or contracts. Management can play a key role in helping agents get in compliance and stay there; yet, sometimes management doesn’t realize the importance of this role or how to carry it out effectively.

The following are 10 ways that management can make life easier for agents faced with myriad compliance requirements, a competitive marketplace and the tendency to focus on the sale above all else.

1. Hold agents to high standards of compliance and expect them to meet them. It is easy to take a “lowest common denominator” approach to compliance. Management that preaches high standards and expects agents to reach them motivates agents to avoid taking compliance shortcuts and meeting minimum requirements. Shortcuts and meeting minimum requirements only can lead an agent to make mistakes.

2. Provide tips that avoid administrative and compliance roadblocks. Management can help agents “get it right” the first time with regard to compliance. When agents make administrative errors their frustration rises as delays increase, which creates barriers to being in compliance. Managers need to know the ways to save agents time and effort with regard to being in compliance.

3. Be available. Management needs to be there when questions arise, not long after the fact when an unanswered question turns into a problem. Timeliness and accessibility can facilitate helping agents stay in compliance and avoid problems.

4. Be a constant source of encouragement. Compliance rules and regulations can be barriers to speedy sales and create delays and frustrations for agents and their clients. Management needs to be there to encourage agents to do the “right thing” and follow the rules every time. Encouragement has to be sincere to maintain motivation when faced with what may seem like unimportant barriers to making the sale.

5. Serve as a “sounding board for questionable situations.” Managers need to build and maintain the trust of their agents, so that agents will ask them about potentially improper or questionable conduct before they act. Managers then can steer the agent toward the right conduct before a situation gets out of hand and damages the agent.

6. Be a source of knowledge and expertise. Management needs to know what compliance is all about. Management credibility depends on its mastery of the basics of compliance. It can’t lead from a position of weakness in terms of knowledge. Management also needs to keep agents informed about changes to rules and regulations and how they impact what the agents do.

7. Provide a network of contacts for answers. Management can’t be expected to know everything about compliance. When management doesn’t know the answer to agents’ questions, it can provide the link to those who do know. Management can lead agents to resources that will help the agents avoid making mistakes.

8. Help the agent become independent. Management should help agents gain the knowledge and skills they need to solve compliance questions as they arise. Making agents totally dependent on management is not effective in the long run. Management needs to steer agents toward the continuing education and development that will help them become self-reliant.

9. Monitor and review agent conduct on a regular basis. Management monitoring and supervision can motivate agents to follow compliance rules. Timely supervision and monitoring can help management spot potential problems early so agents can avoid problems. Monitoring also provides a good basis for identifying training needs that can help avoid future problems.

10. Serve as a role model. Management cannot afford to lose credibility by not being a role model where compliance is concerned. Management must “walk the walk” when it comes to compliance. As soon as management begins cutting compliance corners, agents will follow suit with disastrous results.

Dennis Groner, CLU, ChFC, is a principal in Groner & Associates, a Livingston, N.J., consulting firm. He can be reached by e-mail at [email protected].

Timely supervision and monitoring can help management spot potential problems early so agents can avoid problems


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