In the April edition of Senior Market Advisor, managing editor Andy Stonehouse tackles the issue of the “great divide” between advisors who are happy working without their securities licenses and the various compliance issues they create versus those who can offer a wider swath of services with their licensing. We asked the story’s interview subjects, Jerry Tokunaga of Sacramento, Calif.-based Wealth Solutions Group and Richard Dragotta of Paramus, N.J.-based LPL Financial, for some additional insight on their approach to suitability.
“If you’re truly doing this kind of work as a career, you’ve already done the suitability work before you talk to the customer,” says Tokunaga, who primarily sells annuities. “But I still to a full range of inquiries, discussing how many other liquid assets a client has and outlining the surrender charges of any annuity I sell. I want to know their tax history, and I ask questions to make things absolutely clear, like ‘When do you believe that you’ll ever need this money again?’ Even before 151A raised a lot of questions, we still did this.”
“As part of the financial planning process and philosophy, whether there’s a specific rule or not, if you truly are a consultant, all of the things you do with a client need to be focused on suitability,” says Dragotta, who holds more than a half dozen licenses. “I make sure I have some very specific conversations during the process – we talk about their investment experience, their time horizon, their liquidity, their risk tolerances and their overall financial situation. A lot of it is just servicing the very basics of FINRA Rule 405: Know your client.”