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As a financial advisor, you’ve no doubt read a compliance manual or three in your time. These documents are typically rule-driven, which means they can be long and dense to work with. The good news: You can also lower your errors-and-omissions insurance risk by adopting ethical values and business practices. This article (Part 1) provides 20 quick pointers for doing just that. Watch for Parts 2 and 3 in the coming weeks.
Tip #1: Sell Straight
Make sure your solicitation materials play it straight. You never want to misrepresent who you are, what you do, or what you sell.
Tip #2: Dig for Needs
Do a complete fact-finder and document the needs you find. Then link your recommendations to the client’s documented needs.
Tip #3: Enlighten Your Clients
Educate your clients about what they bought. Make sure they understand what it covers and doesn’t cover, as well as all moving parts, fees and expenses, and risks and guarantees.
Tip #4: Stick to Your Expertise
Always stay in your area of expertise. Dabbling in products you don’t understand is an invitation to trouble.
Tip #5: Document Your Decisions
Put everything in writing. Make sure your client file documents every contact .
Tip #6: Document the “No’s”
Make sure to document when clients decline insurance (example: long-term care). This will protect you from a litigious beneficiary if a client dies without key protection.
Tip #7: Put Companies Under the Microscope
Always do your due diligence on the insurers and investment companies you recommend. Don’t do business on faith alone.
Tip #8: Never Outsource Due Diligence
Read the fine print yourself. If you don’t like what you see, don’t do business.
Tip #9: Transparency is Good
When in doubt, disclose more information to a client than less.
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