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Balance client needs with ethics

Gino Saggiomo, Mark Hynes, Corry Collins

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Advising clients means doing the right thing in all circumstances.
When I answered my phone one sunny Sunday afternoon, I could tell the caller, my client Andrew, was frantic. I could hear in the background, “At $750,000 we have a first call … at $750,000 we have a second call …” I heard Andrew call out “wait a second!”

Andrew had seen me earlier in the week about a property he was looking to buy as his family home. It was perfect — it had everything needed for a growing family. The problem was that, after doing the sums, we had advised him (in writing of course!) his maximum purchase price was $750,000. Andrew was at auction to buy the house, but the bidding had surpassed this amount.

Andrew felt another $30,000 would get him this home. And now, on the phone, he was looking for instant advice to justify his emotional position, while dismissing previous advice. His question to me during that frantic call was, “Could I do it? What assets could I sell to get the deal done?” He didn’t want to let this house go. This was the one.

A thousand things went through my mind. First, we didn’t have much time. While the auctioneer offered a brief recess to Andrew, he was growing impatient. The property was on the market, and the gavel was falling soon.

Second, where was this extra funding going to come from, and to what extent would the additional $30,000 compromise Andrew’s current and future financial position? There was also the compliance paperwork we would have to do. Could I actually advise him in this situation? Did I need to provide written advice before saying, “Yes, we’ll get you through this”? How could I be sure this was an appropriate thing for him to do without properly considering his financial position?

But what about Andrew? What about the needs of his family? What about doing the right thing by him, the client? He valued our relationship so much that he thought, in the midst of it all, to contact me for some advice rather than just making an emotional decision.

These are the decisions we must face every day as we maintain an ethical business. We have a duty to our clients but also to the environment in which we operate. For the most part, our value is not in the advice we present, but the scenarios, options and alternatives we consider in providing the right advice when our clients need it the most.

By definition, “ethics” is a set of moral principles that govern a person’s behavior. The term derives from an ancient Greek word meaning habit or custom. So, it’s understandable that promoting ethics isn’t an act; it’s a way of life.

The essence of MDRT membership is to achieve both an ethical and a successful business. Our outward actions are a projection of our values and thoughts. It is not hard to do the right thing, and MDRT members think and act appropriately, morally and thus ethically. Having the character to live and work ethically is always doing the right thing, even when nobody’s watching.

Gino Saggiomo, CFP; Mark Hynes, Dip FPS; and Corry Collins contributed to this article. They are members of MDRT’s 2017 Ethics Committee.

These standards will be beneficial to the public and to the insurance and financial services profession. Therefore, members shall:
  1. Always place the best interests of their clients above their own direct or indirect interests.
  2. Maintain the highest standards of professional competence and give the best possible advice to clients by seeking to maintain and improve professional knowledge, skills and competence.
  3. Hold in strictest confidence, and consider as privileged, all business and personal information pertaining to their clients’ affairs.
  4. Make full and adequate disclosure of all facts necessary to enable clients to make informed decisions.
  5. Maintain personal conduct that will reflect favorably on the insurance and financial services profession and MDRT.
  6. Determine that any replacement of an insurance or financial product must be beneficial for the client.
  7. Abide by and conform to all provisions of the laws and regulations in the jurisdictions in which they do business.

Consistent ethical behavior, performed as a habit, will help grow and protect our businesses. This is truly a win-win outcome for both clients and ourselves.

By way of example, we all understand the importance of keeping full records and not relying on our memories, or expecting our clients to have perfect memories either. Thus, we should conduct every meeting and client relationship as though the file and notes will be reviewed by regulators at a future moment in time. From the regulators' viewpoint, what isn’t recorded didn’t happen.

Everyone wins when proper procedures are in place and followed. Doing the right thing is honorable. Creating the appropriate documentation is just smart. Here are a few examples:

1. Audio record meetings, scan all paper notes made during a meeting, make an audio summary at the end of the meeting in front of the client, and ask for consent that this has captured the agreed outcomes and actions.

2. Send a copy of a completed life insurance application to the client for inspection, while it is pending. This may sometimes uncover improperly recorded health facts.

3. Document a sales suitability form post-sale, showing recommendations, reasoning and ultimate client decisions.

4. Keep a copy of illustrations rejected by the client. In the future, this helps draw a full picture of discussions.

5. Keep an agenda as a further record of the meeting.

6. Write a letter to the client after business is conducted as a summary of who, what, where, when and why.

7. Display MDRT’s Code of Ethics in your office to reassure clients of the character and caliber of your work.

8. Keep your MDRT membership certificate on display, which quietly speaks to your professionalism.


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