Summit Compliance
New Member
- 5
After working with independent insurance producers, carriers and state insurance regulators for decades, I’ve noticed 3 key items that continue to trip up even the best producers. These are compliance issues that routinely cause unnecessary pain and expense yet are easy to avoid.
These obviously aren’t the only things that a producer needs to be aware of in this great big world of ever-changing compliance rules. It’s inherently risky to be in a business where you are talking to consumers about their life savings and giving them advice. However, I believe that paying attention to these 3 issues can make your life a lot easier by warding off future problems – which are a drag on your time and your pocketbook.
1) Failing to renew your insurance license on time: Visit any state insurance regulator’s website and you will see dozens, if not hundreds, of examples of producers being fined upwards of $250 for not renewing their insurance license on time. This is easy money for the states, and it doesn’t require them to do a thing. Don’t foolishly give money away like this. Make sure you calendar-in your renewal date and take care of it early. A few minutes will save you not only the fine, but the potential for other penalties for continuing to conduct business without a valid license.
2) Using non-compliant advertising materials: Whether it’s a seminar, a lead generation piece, your website, emails, or any other piece of advertising, this is one of the easiest ways for a regulator or plaintiff attorney to criticize you and find an “in” to your practice. If it’s determined that your advertising is misleading or problematic, you’ve now opened the door to numerous other avenues for investigation into your practice. The best way to stay “under the radar” here is to ensure you have a qualified individual or firm review your advertising materials to ensure they meet all of the applicable regulations. If you hold numerous licenses, such as securities or investment advisory registrations, too, be sure that all of these regulations are considered during the review.
3) Failing to properly and completely document your client files: Documenting your conversations and your recommendations to clients is crucial to your continued success. As they say, “If it isn’t documented, it didn’t happen”. As with the use of poor advertising materials, having incomplete files can open the door to regulators to review other areas of your business if they suspect an inadequate or problematic sales practice.
With all of the recent attention on the fiduciary standard vs suitability, it’s more important than ever to make sure that your documentation supports what happened. If there is a question of suitability or even misrepresentation to a client, it becomes a he said/she said situation. A solid client file, which describes client meetings and calls, discussion items, sales literature used, and recommendations made (along with the rationale for them), can be the tie-breaker that swings the decision in your favor. In some cases, you may be asked to turn over a copy of your client file without the opportunity to explain it, so the take the time to ensure your file is complete and can stand alone. Develop a system of documentation that is complete and use it consistently.
Manage these 3 simple items and you can make life a whole lot easier!
These obviously aren’t the only things that a producer needs to be aware of in this great big world of ever-changing compliance rules. It’s inherently risky to be in a business where you are talking to consumers about their life savings and giving them advice. However, I believe that paying attention to these 3 issues can make your life a lot easier by warding off future problems – which are a drag on your time and your pocketbook.
1) Failing to renew your insurance license on time: Visit any state insurance regulator’s website and you will see dozens, if not hundreds, of examples of producers being fined upwards of $250 for not renewing their insurance license on time. This is easy money for the states, and it doesn’t require them to do a thing. Don’t foolishly give money away like this. Make sure you calendar-in your renewal date and take care of it early. A few minutes will save you not only the fine, but the potential for other penalties for continuing to conduct business without a valid license.
2) Using non-compliant advertising materials: Whether it’s a seminar, a lead generation piece, your website, emails, or any other piece of advertising, this is one of the easiest ways for a regulator or plaintiff attorney to criticize you and find an “in” to your practice. If it’s determined that your advertising is misleading or problematic, you’ve now opened the door to numerous other avenues for investigation into your practice. The best way to stay “under the radar” here is to ensure you have a qualified individual or firm review your advertising materials to ensure they meet all of the applicable regulations. If you hold numerous licenses, such as securities or investment advisory registrations, too, be sure that all of these regulations are considered during the review.
3) Failing to properly and completely document your client files: Documenting your conversations and your recommendations to clients is crucial to your continued success. As they say, “If it isn’t documented, it didn’t happen”. As with the use of poor advertising materials, having incomplete files can open the door to regulators to review other areas of your business if they suspect an inadequate or problematic sales practice.
With all of the recent attention on the fiduciary standard vs suitability, it’s more important than ever to make sure that your documentation supports what happened. If there is a question of suitability or even misrepresentation to a client, it becomes a he said/she said situation. A solid client file, which describes client meetings and calls, discussion items, sales literature used, and recommendations made (along with the rationale for them), can be the tie-breaker that swings the decision in your favor. In some cases, you may be asked to turn over a copy of your client file without the opportunity to explain it, so the take the time to ensure your file is complete and can stand alone. Develop a system of documentation that is complete and use it consistently.
Manage these 3 simple items and you can make life a whole lot easier!
