If you say you’re going to do it, then “DO IT”

Risk questionnaires, IPS’, Client contracts…all necessary in a well run RIA.  However, beware…all of these documents “can and will be used against you in a court of law”.

I recently attended the NAPFA pre-conference compliance day which was excellent.  One of the most important takeaways for me was “if you say you’re going to do it, then you MUST do it and DOCUMENT IT CAREFULLY!  It’s not enough to have a conversation with a client, it must be documented.  Best method?  In my opinion, it’s an email follow up.  Emails are archived and will show proof of your conversation.

Tom Giachetti & Bob Veres played out a wonderful and highly enlightening “mock trial” of an advisor who, despite his best efforts to do what is best for his clients, finds himself being sued by a client who claims various omissions by the advisor.  Of course, the advisor cannot document any of these conversations because after all, there is a trust there right?  Your clients would never turn on you because they trust you.

Advisors are sweethearts…everyone knows this. You truly have your client’s best interest at heart and because of this, you sometimes forego the actions that you know are necessary to protect you and your business because after all, you have this great relationship with your clients right?  What could go wrong?

Plenty…as the old adage goes…”you never really know someone until you divorce them”.  The same is true here…you  never know a client until a lawyer gets a hold of them.  In these tumultuous markets, the scene is set for trouble!

Document everything!  When you have meetings with clients, send them a recap of the decisions/discussions by email.  Set your CRM to get a receipt of delivery if it’s available.  Review your client contracts…are you fulfilling your duties.  Review client IPS’ and questionnaires.  If you asked a client “what is the largest lose in their portfolio they could be comfortable with” and they’re below that, meet with them ASAP.  If your client contract calls for certain services to be delivered and they’re not, either get a new contract signed or get the services delivered.

I know your heart is in the right place but unfortunately, I doubt if I’ll be on the jury.

Take care and call or email me with any questions or comments.