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Life Health > Annuities

Managing client information

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“Information is the oxygen of the modern age.”- Ronald Reagan

President Reagan was speaking about the pivotal role unrestricted information plays in securing freedom. But he could as easily have been talking about the importance that open information plays in your freedom to act as a trustworthy advisor. That’s because clear-cut disclosure flowing from client to advisor, from advisor to client, and from both parties to the file is the oxygen that will keep your financial services business alive and well.

Think about it. If information flows freely, and is managed correctly, it is much easier to be on top of your sales game. You know what clients’ needs are and how to meet them. You’re much less likely to get distracted by side issues such as commissions. By that same token, clients will sense your integrity and know exactly what you’re recommending and why it makes sense. Finally, down the road, others – beneficiaries, regulators – will know you acted responsibly because your clients’ wishes and your recommendations were fully documented in writing.

Let’s take a closer look at the three types of information flow:

1. From the client to you. Never enter an initial client interview with a predetermined product recommendation unless you know enough about the client to support that recommendation. For many of you, this goes without saying. For the rest, consider getting serious about fact-finding before your practice starts gasping for breath.

And document all your fact-finding efforts, with no exceptions. At the National Ethics Bureau, we recommend you skip the short forms and start using one of the comprehensive, multi-page client worksheets that are available. These force you to collect all relevant information and probe deep on key concerns – from detailed personal data and investment risk tolerance, to investment account holdings, objectives and goals (both short and long).

2. From you to the client. Start by fully disclosing who you are, whom you represent, and how you get paid. Then after a careful needs-based analysis, fully disclose what you’re recommending and why. When it comes to communicating solutions, there are two types of misrepresentation to avoid: not accurately describing your product and omitting key facts about the product.

  • Example of the first type: Telling your client with liquidity concerns that your recommended product is “highly liquid” when it carries a surrender charge.
  • Example of the second type: Not mentioning to your client that your recommended product has a surrender charge. Either form of misrepresentation is a huge problem, so steer clear. If you don’t, the choking sound you’ll hear will be your integrity – and possibly your business – running out of air.

3. From you and client to the file. Don’t just document your recommendations. Document the client’s reasons for buying, reasons for exchanging, plus any concerns he had. This will eliminate confusion today and legal problems tomorrow, when beneficiaries may be tempted to legally challenge your recommendations.

Don’t let your business collapse like the Berlin Wall. Infuse it with information – and integrity – so it will stand the test of time.


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