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Transitions Magazine

Compliance Savvy

brochure document (ADV 2). This is on top of all the other documents already piled on clients: • New Account Form • Prospectus • Client Agreement

What can you do to simplify your business life? Is there a way to be efficient at balancing your obligations to regulators, clients, and your operations? Here are 8 tips to get you started. 1. The first step is to overcome your fear of complying.

• Privacy Notice

Be accepting of the environment you work in, and

• Anti-Money Laundering Notice • Business Continuity Plan Summary Customer Notice • Margin Agreement

that things are not really as difficult as they seem. It

is a very highly regulated industry. The regulations (for the most part) make sense.

2. Although it’s the rule, have Written Supervisory

• Option Agreement

Procedures (“WSP”) (aka Compliance Manual or

• Penny Stock Disclosure

Policies and Procedures) that are customized for

• Investment Policy Statement

your operations. Whether you are a one-person

• Mutual Fund Fees and Breakpoint

shop or part of a larger organization, it will give

• Variable Annuity Risk Disclosure Document

you a reference document that tells you what you need to do to stay in compliance. When you draft

• Switch of Investment Form

the WSP, you need to consider requisite rules, but

• Solicitor Compensation Disclosure

also specific procedures that are reasonable for your

• Investment Objectives Definitions I’m sure you can name a few more. Those are just at account opening. In case clients forget what we gave them, we must also provide the Privacy Notice on an annual basis; provide the Form ADV 2 annual summary of material changes (no longer just an annual offer); and Registered Reps must update the new account form once every 36 months. I’m a very rules-oriented person. This is why I chose compliance as my profession. But even I am overwhelmed at the velocity of the changes. I respect that investors must be protected. I also respect that a businessperson must focus on what he or she is in business to do, and can’t make compliance a full-time job or allot an over-proportionate share of the budget to compliance.


8 Tips to Simplify Your Business Life

type of operations. Do not plagiarize boilerplate language that has no applicability to what you do and who you are.

3. Full disclosure to clients is important. While we all

believe we tell the clients everything they need to

know about the investment vehicle and our conflicts (yes, fee-only advisors have conflicts too), it is im-

portant to get those disclosures on paper and in plain English. A specific disclosure (e.g. privacy notice or

mutual fund charges) should not be more than one

page each. Having standardized forms for clients will make your disclosure job easier. And having an

internal checklist in each client file to track disclosures given will help you in your compliance job.

September 2010

Profile for Financial Forum Inc.

Transitions Magazine - September 2010  

Business Management for Independent FInancial Advisors

Transitions Magazine - September 2010  

Business Management for Independent FInancial Advisors