A new wave of regulations has hit the financial services industry; specifically, rules for client suitability and fee disclosures. Just when we thought we had our systems well organized, along comes a whole new set of requirements. Here are three improved standards you can add to your practice.
1. Release of Information form
Beyond spouses authorizing advisors to share information between them, there is an increased need to share information with other parties. Clients now request financial information to be shared with professional advisors, their CPA or attorney and business partners. In response, my practice developed an authorization form, which each client signs, acknowledging the persons or entity and the type of information we are authorized to disclose. Two originals are completed, one for the client and one for our files. This also covers corporate clients with two officers signing to authorize release of information.
2. Combined reporting authorization
Restrictions regarding how insurance policies or investment account information is reported are increasing. Clients often have multiple asset types under management – 401(k), IRA, insurance, joint accounts, business and trust accounts (revocable and irrevocable). While it may seem natural for all family connected assets to be combined into a single report, consider business-owned life insurance or an irrevocable trust. Family members may be the insured but not the legal owner. I recommend developing a form to identify the individual, policy/account number and an owner’s authorization to allow combined reporting.
3. Distribution of meeting minutes
I’ve always been a believer in taking good notes at meetings. They serve as a great resource to document conversations and generate action steps. Thanks to my participation in non-profit boards, I appreciate the distribution of minutes, their correction and approval. This makes sense in the world of non-profit management; why not build it into your practice? Prepare minutes for client meetings and distribute them to those in attendance with a follow up asking for corrections and confirmation. The procedure will be well received by clients, joint colleagues and other professional advisors.
As compliance requires increased disclosure, documentation and record retention, establishing procedures that improve communication with clients can be viewed as positive. In the long run, making these standards regular habits truly simplifies our process and assures a winning proposition for your clients, practice and those in compliance supervisory positions. Here’s to an all-around win for your clients, practice and compliance personnel.