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Basic compliance to build better business

By Jim Ruta | January 18 2011 04:44PM

Photo: Freepik

Are there compliance basics I can follow to spend less time thinking and more time helping clients?

Compliance regulations defend consumers against greed and ignorance. Take these two variables out of the equation, and you can worry less and do more. Here are the basics:

1- Only sell products you know well enough to explain so prospects really understand. Failing here leads to claims. When policies don’t work like the client remembers they were supposed to, you’re in trouble.

2- Unless you are licensed, educated and trained in a professional discipline, stay out of it. Guessing has never been good enough because your “guess” is your clients’ “gospel”. When you’re wrong and it matters, you’ll be sued and lose. Apparently, 30% of E&O claims are for activities not covered by the adviser’s license. Trying to add an extra tool for your toolbox to make an extra buck won’t fly in court.

3- Your client’s interests are your first and overriding priority. Any other priority is just wrong. Playing fast and loose with clients’ instructions and taking your time implementing them leads to big trouble. Time is absolutely of the essence in this business.

4- Process transparency is the key to trustworthiness. Be sure your prospects receive your business process and benefits in writing and you’ll minimize unhappy surprises. That cuts your exposure.

5- Premature cancellation leads to litigation. I wonder how insurance policy replacement became the norm and not the exception. My information is that more than half of policies replace old business. Whatever happened to replacing human life value? Know and follow all the rules.

6- Only make product and service recommendations that you can prove suit your client‘s circumstances. Know Your Client (KYC) forms only formalize long-standing appropriate process. Fact-finding forms are critical too. Good KYC and fact-finding is not a page, it’s a process. Document what they and you say so you do the right thing for them. How about using an investment KYC for cash value insurance too? That’s the next level of client protection.

7- Take notes about client meetings for your file so you can prove what went on. Too many advisers have too little documentation about their client sales and service discussions. Keep detailed records. Make them in the meeting or right after the meeting. Notes you made yesterday about a meeting you had ten years ago just won’t cut it either.

8- Never over promise and under deliver your services. If there is anything worse in this service business, I don’t know what it is. A friend in the PR business writes a “retainer letter” to a new client outlining the limits of the work he can do for them. It expressly minimizes client expectations. MDRT star, Marc Silverman tells clients, “I’m not here to make you rich. I’m here to help you not be poor.”

Following these simple principles will help you help more clients. There are business payoffs too – like referrals and more peace of mind. Good compliance helps you deserve them both. And, regulators and media will have less to talk about.


What’s the best answer when people ask me “What do you do?”

Got caught with nothing to say in an elevator with a chatty prospect? This has to be the most important and yet frightening question in the business. I believe it even prevents some people from getting involved. Many ways are touted as the perfect answer but for some reason they don’t persist. There are “elevator talks”,  “mission statements”, snappy lines or even misdirection. But, we still don’t have a lot of clarity on this. It’s still confusing. And, the more confusing it is, the scarier it is. The scarier it is, the less business you’ll do. And, here we are.

But, there is an answer. The best approach to this honest question is an honest but compelling response. That way, people will follow up. It also must be simple and easy to say. If it isn’t all of this, you won’t use it. And, that’s why you still wonder. Traditional answers don’t resonate with advisers and their prospects. That’s what really matters,

This question is really two questions in one. “How do you help people?” and “Can I benefit from working with you?” Nothing else.

With most businesses or professions, the value and applicability are usually readily apparent. I’m a carpenter. I’m a doctor. I sell real estate.

Draw a clear picture

Anyone can easily tell if that value applies to a current need. On the other hand, I’m a “financial planner” or a “financial advisor” and even “I’m a life insurance agent” isn’t specific enough to draw a clear picture in the mind of the listener of your benefit. Therefore, they have no idea if that matters to them either.

Real prospects are looking for your clear “expert identity”. An expert identity is just five to eight words that clearly express the benefit of your best expertise and the audience that can make the best use of it. It answers both implicit questions and it won’t even take 30 seconds, like an elevator talk. Harvard research says it only takes two seconds to make an impression anyway. So, this has to be well rehearsed and comfortable.

For example, my expert identity is, “I re-energize performance and productivity for financial advisors”. Marc Silverman’s is “I make retirement better for everyday people”. Here are a few others – “I preserve family legacies for people who care”, “I make life less taxing for regular people”, “I cut the risk for entrepreneurs and executives”, “I protect lifestyles and legacies for entrepreneurs” and “I help protect lifestyles for busy families”.

You can see that anyone can quickly decide if what you said applies to him or her. The answer you want is, “Really, how does that work?” Then you are into a discussion.

Any other approach to the question usually ends up as a long-winded, run-on sentence or currently fashionable buzzwords that make no sense. Try the “expert identity” instead and you’ll be much more effective. You’ll be clear and confident when you get it right.

Clarity attracts results. Confusion repels them.

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