Good Business: 20 More Tips for Lowering Your E&O Risk

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 3) provides 20 more quick pointers for doing just that. Watch for more parts in the coming weeks.

Try to resolve complaints as quickly as possible. If you know how to fix matters, commit to doing so ASAP. If you don’t, promise to learn how within a certain number of days.

When a client is unhappy with you, “own” the complaint and commit to a fair outcome. You will more likely retain the client long term.

The more financial-services companies offer you “trinkets” to sell a product, the less likely the product will be truly great for your clients.

Products, marketing tools, and sales support are all well and good. But what’s most important is a commitment to ethics.

Make sure prospects match your client profile. This will help you avoid problems and do the work you most enjoy.

Don’t feel obligated to work with all referred prospects. You may end up out of your comfort zone. However, encourage your network to refer prospects who do match your target profile.

When you first meet a prospect, determine “fit.” Ask open-ended questions and listen carefully to the person’s answers, body language, etc.

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If a client no longer fits your profile, it’s best to resign the account. But try to help the person find a more appropriate advisor.

If a client is overly needy, abrupt, or annoying early in your relationship, chances are he or she will get worse latter. Take appropriate action now.

As a financial advisor, keeping promises is crucial to your success.

1.Never promise something you can’t deliver

2.Always under promise and over deliver.

3.View your client promises as a sacred trust.

4.Get better organized so you don’t forget the promises you made.

Don’t let commissions color your professional judgment. If you do what’s right for your clients, you’ll always earn more than enough money.

Make sure clients know the significant downsides of every product you recommend. Full disclosure is always a winning strategy.

If you’re an insurance salesperson, don’t hold yourself out as a investment advisor. Earn an appropriate RIA license first.

Don’t leave your CE courses to the last minute. Give yourself enough time to really learn something.

Make a “life list” of important books you want to read. Or pick a hobby you want to pursue and master. Or start learning a foreign language at your local community college. The point is to keep learning. This will help you to become more adept around people and more skilled at identifying and resolving problems.

This may trigger FINRA’s Rule 2310 (on suitability), requiring prior approval and additional disclosures.

Make sure your anything you post online complies with FINRA’s content standards (fair, balanced, etc.).

This means they need to be submitted for broker-dealer review before posting.

If you’re an RIA representative, don’t ask your clients for testimonials. It’s illegal.

Be sure to disclose full information about the issuing company, including ratings and track record.