An engagement letter is part of best practices when you’re on a first contact appointment or the front end of the discovery process. An engagement letter basically outlines what the adviser and client will do. Sometimes it addresses items the adviser won’t do. It’s part of the defensive posture to identify the rules of the relationship between adviser and client, especially for new relationships. That being said, an adviser should create an engagement letter for existing clients as well during … [Read more...]
The Movement to Preserve Principal is Shifting into High Gear
The pandemic popped the clutch and downshifted the mentality of investors and savers alike to principal preservation. If that indeed is the client’s psychonomics and is verified by a risk tolerance test, then ok. But to sideline everyone from market driven products to annuities and participating whole life insurance better be confirmed in writing or you’ll be open to the accusation of just selling insurance products and high commission contracts. On the other hand, if you’re telling seniors … [Read more...]
Second Opinion Marketing to Gain Prospects while Clients Lose
The online claims of advisers who said they had exit strategies ready to offramp from the broad road of the market destruction are way overblown. Marketing to new clientele by promoting exit strategies that your existing clients were “timed” out of the market, when in fact they lost like everyone else is fiction, fraud and prosecutable. By the time, the public observed the market’s accelerated decent, the institutional money managers had exited the building. Few if any small firms or … [Read more...]
High Compensation Products Trigger Suitability Scrutiny
The pandemic crisis of 2020 is generating more than just medical terror, it’s creating a cash flow crunch for advisers whether they’re fee based or commissionable salespeople. Often the temptation in these times is to sell high compensation products for your own survival against your fiduciary responsibility to your client or prospect. This is an agonizing environment to sell in, especially for those new to the financial services business who lack a book of business that generates a ongoing … [Read more...]
Unsuitable Recommendations Can Create Unwelcomed Lawsuits
The cost of fraud is expensive with attorney fees, settlement costs, revocation of your license(s) and not covered by your errors and omissions insurance. Client suitability should be a chief concern in product and planning recommendations. There are many risk tolerance tests, psychological questionnaires and past financial history to collect a client’s attitude about money during the discovery stage of the interview process. Case in point: A financially conservative married couple in their … [Read more...]
Intentional Omissions of Material Fact is Deceit
The cost of fraud is expensive with attorney fees, settlement costs, revocation of your license(s) and not covered by your errors and omissions insurance. Remember, he who frames the argument wins. Presentations to the public are going to be scrutinized for any misleading information that enhances the “sales close.” An example: Historical performance is not an indication of future performance. If that’s true why do you bring it up all. Case in point: 10-year performance calculated from … [Read more...]
Lies, More Lies and Damn Lies
The cost of fraud is expensive with attorney fees, settlement costs, revocation of your license(s) and not covered by your errors and omissions insurance. Lies that are unintentional are still lies. Intent is irrelevant. Intentional lies could fall into the realm as criminal. Chronic falsehoods about products, planning and other planners may disqualify you as unfit to handle others finances not to mention losing your status as a fiduciary. Inaccurate descriptions of policy provisions or … [Read more...]
Silence May Not be a Sign of Thoughtfulness but of Ineptness
The unintentional omission of material facts in your presentations can be as dangerous as fraud. Incompetence is a form of ineptness. You may honestly be able to say you weren’t aware of some critical fact, that if presented, may have turned out to be a deal killer for your client. But in our suit happy society ignorance is not a defense when you should have known better because you position yourself as financially knowledgeable. When you can’t explain to an arbitration board why you sold a … [Read more...]
Your Decades of Experience Could Be Your Downfall
The unintentional omission of material facts in your presentations can be as dangerous as fraud. I’ve been in this business almost forty years. On one hand it’s that experience I promote like a badge of honor, a tribute to my staying power. And why do most seasoned veterans advertise that fact? Because the public loves longevity. On the other hand, it could be a noose around my neck if things go badly with a client because of an omission. After all, you’ve been around forever, and you should … [Read more...]
Your Resume Maybe a Ticking Time Bomb
The unintentional omission of material facts in your presentations can be as dangerous as fraud. And it doesn’t exonerate you even if you don’t hold yourself out as a fiduciary. So, if you omit a fact that could have altered the buying decision and that decision negatively effects your client you have a problem. And the first-place arbitrators and litigators troll is your online profile. Bios are in fact, autobiographies that are used for touting expertise, authority and advanced knowledge. … [Read more...]
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