Avoid these four compliance taboos

By Jim Ruta | November 09 2016 07:00AM

Photo: Freepik

What are the basic rules to be more compliant in my business?

You can be “litigation resistant” but no one is “litigation proof”. You don’t have to be lying, cheating or stealing to be sued. You just have to leave an opening. The combination of liability insurance and contingent legal fees means every advisor has a million dollar “bank account” from which courts can draw. Protect yourself.

Take the winning perspective with compliance. Use it effectively and it can be an advantage. Take the whining perspective – just complain, and you guarantee it will work against you.

Working with advisors and regulators across North America, I’ve found at least four general compliance taboos (from my layman’s perspective) you must avoid:

  1. Making promises you can’t keep. Nowhere is overpromising and under delivering more detrimental to your professional health than dealing with clients. Don’t make promises. Be tentative or conditional. You have no control over rates, products or returns. Leave the promises to companies.
  2. Misleading clients unintentionally or intentionally. Clients are entitled to rely on the things you say, so you have to be right. If you don’t know, find out.
  3. Making inaccurate statements. If you could be wrong, just don’t say anything. Guessing is a dangerous game. Of course, trying to be impressive to induce a purchase is wrong.
  4. Not disclosing relevant conflicts of interest. If you get a commission or a fee, say so. There are no secrets before clients and there shouldn’t be.

Here are a few ways to help build a business system that makes it easier to stay inside the lines, look more professional and minimize your professional exposure at the same time.

  1. Set the stage with clients in writing. The written, signed client engagement document is not a fad. It creates the client relationship and limits their expectations to your expertise. It gives you permission to do your work.
  2. Have a set sales system and interview process. Use an agenda and meeting guide. A routine system makes you more believable and professional.
  3. Take notes. Whether digital or analog, personally done or dictated, you need good notes in the file. Make notes during or immediately after a contact in person or by phone to confirm what was discussed, decisions made and why.
  4. Confirm actions and requests in writing. Your advice, their acceptance or decline and ongoing activities and needs must be written down so you have supporting documentation for your statements and actions.
  5. Keep everything to yourself – pretend you are a doctor or a priest. Confidentiality is key. Make no assumptions about what is acceptable. Check everything.
  6. Stay in touch regularly – at least annually, and give proper updates and reviews of client portfolios. Advice changes as people and regulations change. You are responsible to keep your clients current.
  7. Keep super files. Like a police officer’s notebook, files must be complete and entirely relevant. Keep what you talked about. Discard the superfluous. Use 2-hole punch clips to keep it all together. Yes, paper is good.

Compliance is intended to help clients get better service. Can’t argue with that. Build it into your business and you join the ranks of the professional.

How can I be a better prospector?

Many advisors tell me “If I can just get in front of a good prospect, I sell most of them.” And, there’s the rub. Selling is relatively easy. The trick is finding people to sell to.

Fortunately, there is a process top advisors use to create to make prospecting a process so it’s no longer a problem. Here’s a summary of what it takes:

Identify Your Natural Audience. To prospect effectively, you must have a proper idea who you are looking for. “Ideal client profiles” are insufficient as they target a market you want to be in but maybe don’t properly match. When you match your expertise and experience with the right group of people, you have a natural audience. This group:

  •  Is naturally inclined to trust you.
  • Easily takes your advice.
  • Know their options and opportunities in your service.
  • Takes your calls.
  • Recommends your service.

Uncover Your Natural Audience’s key needs and wants that you can satisfy. Good prospectors know how they help their natural audience best with what they do best. These are the “hot button” issues they are already inclined to solve. Prospect for the business you do best. Members of a natural audience are similar so when you solve for one, you can solve for many. Prospect to solve a specific problem.

Create a focused portfolio of products and services solving key wants and needs. To be a good prospector you must know what you are selling. People have little time or appetite for a fishing expedition to discover where you can help. So, put together a general solution for the problems shared by members of your group and demonstrate you qualify you can help them too.

Build a presentation based on their objections, solve those issues. Great prospectors target their audience’s problems and concerns about you and your solution. They present a focused sales talk based on the issues likely to come up in the interview, maximizing the impact and minimizing the power of objections. That shows real client and audience knowledge.

Use multiple ways and locations to connect and show how you can help. Marketing and advertising is necessary for anyone trying to build and maintain a clientele. When you know “who” you want to connect with, you know “where” to find them. You know what they read. What they watch. Where they spend their money. Where they live. Where they work. How to find them. How to reach them. Then do it. Marketing is like taking vitamins. You have to do it all the time to maintain the proper impact. Marketing can make you the “industry celebrity” to your marketplace.

Ask Your Natural Audience to Buy, all the time. Unless you ask someone to buy, nothing happens. If you don’t A-S-K, you don’t G-E-T. It’s simple. But, if it’s simple to do, it’s simple not to do. Selling is something you do for people; not something you do to people.

There is no magic bullet to prospecting. An organized process makes you competent and confident to ask. Then, you need this plan and the courage to ask.