What kind of documentation is needed to support suitability of financial recommendations? Dennis Groner, a Livingston, N.J. compliance consultant, suggests the following:
1) The information collected on the consumer’s personal and financial goals, objectives, needs, and the consumer’s financial situation, including other life insurance, annuities, etc. owned by the consumer.
2) The information collected on the consumer’s personal situation, including outstanding personal, family and health issues.
3) Copies of any important client information, such as listings of investments, assets, etc. that were used in reaching a recommendation.
4) The names and responsibilities of any consumer advisors involved in the sales process and copies of information provided by the consumer’s advisors.
5) Information on tax implications that were included in the analysis used to reach a recommendation.
6) The source of any information about product features, benefits, etc. used by the agent in his or her analysis to reach a recommendation.
7) A description of the analysis process–how the consumer’s needs and situation were matched with product features, benefits, etc. If more than one product was considered, then this description should answer the question of why one product was chosen over another.
8) When and how the recommended product’s features, benefits, advantages and costs were shared with the consumer, including the specific sales material shared with the consumer.
9) Any questions the consumer asked or information he or she requested.
10) The consumer’s decision on which product to purchase if more than one was presented.
Source: Dennis M. Groner, PhD, CLU, ChFCe, a Livingston, N.J. compliance consultants in financial serfivices, in “documenting Suitability Is Crucial For Agents,” an aricle in the July 20, 2009 issue of national Underwriter Life & Health. Click here for the entire article