Get it in writing: Proper documentation is key when it comes to annuity sales

Justin Bilyj, broker and owner of My Insurance Counselor Agency in Cleveland, says he learned early on to get all major decisions in writing. “If you make a recommendation, note it down, and if you make a recommendation to a client that can affect their financial outlook and they decide to not act on your recommendation—especially in the litigious culture we find ourselves in—definitely get it in writing that they decided not to take your recommendation,” Bilyj said.

“Not only should a broker take notes to defend against claims of unsuitability, but a broker should take notes in case a future beneficiary of the client needs to understand the context of their decisions,” he adds.

There are three key reasons that a broker should take notes, according to Bilyj. “The first is to prove suitability in case it is called into question; the second reason is to protect the broker in the event the client doesn’t act upon a recommendation and feels ill-advised; and the third reason is to make any future beneficiaries or inheritors understand the context of any client decisions that could limit the possible inheritance.”

Today’s indexed and variable annuity products are hard enough for the typical producer to completely understand, let alone explain to the average consumer. Obviously it is important to be able to explain how a product being considered works, but it is equally important to make sure you document that you covered key aspects like surrender charges and how they are triggered. Do not gloss over them – emphasize them and help the client understand. Explain why they exist.

If a producer tells a client about surrender charges but the client disputes this a year later, without proper documentation the producer could find himself the target of a troublesome ad from a law firm.

Don’t put your reputation and your practice at risk.