Reflecting

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Oct 19, 2006 12:16 pm

as a true indy would say, buy a traditional variable annuity and put a lifetime income rider on it.  make sure you tell the client you are payhed 6% gross up front.

Oct 19, 2006 12:55 pm

Document, document document that we have had these discussions.  I have had clients recently who wanted to get more aggressive; a very bad sign in my book, even more worrisome than those who want to pull to cash.   I have made them sign documents that I have advised against these aggressive moves.  If they make money...well good.... they won't hold it against me because they know I am a cautious advisor. However, if they lose, at least I have some documentation that I told them not to.

How will we maintain them as clients?  Being proactive, listening to what they want and presenting all sides of the problem, making them a part of the process and guiding, not forcing, them into a decision.

I guess we will lose a few who will blame us for their own decisions. 

[/quote]

Babs,

Would you recommend documenting also for the opposite scenario?  Say a client is 100% cash but these assets are not going to be utilized for over 10 years.   Can it come back to bite us if we didn't document we recommened a more appropriate diverse portfilio and they lost out on opportunity cost?

Just curious.

scrim

Oct 19, 2006 1:40 pm

[quote=scrim67]

Document, document document that we have had these discussions.  I have had clients recently who wanted to get more aggressive; a very bad sign in my book, even more worrisome than those who want to pull to cash.   I have made them sign documents that I have advised against these aggressive moves.  If they make money...well good.... they won't hold it against me because they know I am a cautious advisor. However, if they lose, at least I have some documentation that I told them not to.

How will we maintain them as clients?  Being proactive, listening to what they want and presenting all sides of the problem, making them a part of the process and guiding, not forcing, them into a decision.

I guess we will lose a few who will blame us for their own decisions. 

[/quote]

Babs,

Would you recommend documenting also for the opposite scenario?  Say a client is 100% cash but these assets are not going to be utilized for over 10 years.   Can it come back to bite us if we didn't document we recommened a more appropriate diverse portfilio and they lost out on opportunity cost?

Just curious.

scrim

[/quote]

Absolutely!!  Every recommendation you make, and the clients acceptance or declination of that recommendation should be documented.  I have had clients sign forms that I recommended that they went against my advice in either direction, especially when I think it might come back to bite me in the end.  Most documentation is in the form of notes of meetings in the client files.  Basically the form states: I recommended so and so and such and such.  The client has decided to do do and so and such and such on this date.  I always send a confirmation letter, whether or not we had a decision form signed, stating: pursuant to our meeting/conversation of this date I have taken these actions and file it all in their file.

I don't make it a confrontational issue. "Mr Client I am just making sure our records are complete and up to date and so that in our next meeting we both will be better able to remember better what we have decided and discussed today."    I think the clients appreciate the details being attended to when it comes to their money.  They may suspect that it is also CYA for me too.

Oct 19, 2006 2:13 pm

I just checked with my compliance back office and they said just note it in the file.  There was nothing I could get signed.

scrim