By Gissou Gotlieb, Field Suitability Compliance Officer
The “right” thing – we are asked to do it day in and day out, we are asked to think it day in and day out, but sometimes figuring out what the “right” thing is, is so elusive. How do we define “right” and how do we know when our assessment is right??
It seems obvious in discussing this topic that “right” is subjective and open to interpretation based on the people involved and, at times, the circumstances. However, in our practical lives, we treat “right” as if it were objective and absolute. We move forward with our day making big and small decisions based on what we believe is right, only to be told that at times, not only was our action not right, but that the end result wasn’t right, or not even perceived to be right. In reality, there are several aspects to “right” and as financial professionals, we need to think about “right” in terms of our conduct, the results, and perception.
With ever more focus and scrutiny on the financial professional’s role, it goes without saying that doing the right thing is important. But now we may be forced to also think more deeply about the results of our conduct and how it may be perceived by the collective community – not just our clients, but their beneficiaries, the regulating authorities, legislators, and others with a voice in our industry.
How do we take such a subjective term and make it objective so that we can more clearly determine what to do and have confidence in our action and its impact?
As a compliance professional, I could say that acting compliantly is a good indicator of what is “right”. However, I know that in some instances, this advice would not be sufficient as there isn’t a rule about every scenario that one may encounter in the business of helping people with their financial goals. That is why I suggest in your daily actions, big and small, that you have the perspective and interest of your clients in mind first and foremost while acting within the rules and regulations.
For example, let’s say your client calls you in distress because they had really hoped to purchase a new insurance contract/policy with you. However, their window for locking in a higher interest rate is closing before they can meet with you. You might think that by offering to sign the application on behalf of your client, you are taking care of them. So this action, while seemingly right for your client, is not compliant, nor would it be perceived as right by the insurance industry (regulators or carriers).
On the other hand, selling your client an insurance contract that provides opportunities for accumulation as well as income may be very useful and suitable, all of which you can demonstrate to them and on the paperwork. However, if your client did not want that product, it is still not the right thing to do.
Another example can be regarding advertising for your practice. While it may seem right from a marketing perspective to entice prospects by posting pictures of your last client event on social media, remember that others viewing your event may not see it that way. If your event seemed extravagant, regulators or even prospects may feel like you are buying your clients’ business and/or that you only deal with high net worth clients and are out of touch with the middle class. While you may have done everything right and there was nothing wrong from a compliance perspective with your event,* depending on if and how you advertise it, your ad may not be perceived as you wished.
So in determining your actions and decisions, remember to think about your client’s perspective, how your actions may be perceived, and whether in fact you are in compliance.
Gissou Gotlieb | Field Suitability Compliance Officer
Ann Arbor Annuity Exchange
Ph: 800.321.3924 x134 | Dir: 734.786.6134
* Various state insurance regulations, as well as other state regulators prohibit the “gifting” of items, or inducements, which may include entertainment expenses, marketing or other activities (e.g. client appreciation events, etc.) by financial professionals in excess of a certain dollar value with some of those limits being as low as an annual aggregate value of zero dollars. Prior to engaging in any marketing programs, be sure to check with your state(s), broker/dealer, and other regulators and firms to ensure that you are complying with applicable requirements and guidelines.
Ann Arbor Annuity Exchange and its representatives do not give tax or legal advice. Please consult your tax advisor or attorney.
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