documentation-blessing-curse-financial-advisors

Documentation—the practice of summarizing every key client conversation and decision in writing—is a crucial part of your day. It not only produces a paper (or electronic) trail of your regulatory compliance, it helps to support your legal defense in case a cl­ient sues you.  For these reasons, compliance officers and attorneys are big on documentation. In fact, they would love for you to spend your entire day on it, despite the inevitable revenue plunge.

However, insurance and financial advisors may not be as positive about documentation as their compliance and legal colleagues are. That’s because they’re the ones who have to do it. What’s more, each minute spent documenting imposes an opportunity cost in terms of time lost to prospecting, sales meetings, business management, and the like. As regulations become more involved, the documentation requirements soar in tandem, taking up more time, imposing more costs, and generally making the life of a financial professional more tedious.

Are you spending more time on documentation these days? Do you find yourself dreading every client phone call because now you have to record its key outcomes? If so, you’ll be happy to know you’re not alone.  According to a new survey from Nuance, maker of Dragon speech recognition software, 89 percent of financial advisors say heavy documentation limits the time they can spend with clients; 37 percent spend three hours or more each day writing financial plans, regulatory filings, or other documentation; and 48 percent say they have to generate at least one full page of notes after every client interaction. Is it any wonder documenting may not be your favorite activity?

Fortunately, taking and storing notes isn’t as hard as it used to be. Today, you have customer relationship management (CRM) applications to help with the generation, filing, and retrieval of meeting notes. In fact, according to Nuance, more than two-thirds of the financial advisors it surveyed use CRM software. However, the majority are less than satisfied with their CRM application, saying it’s frustrating and difficult to use.

In response, financial-services firms give their advisors a host of additional documentation tools, including standardized templates, disclosure forms, and the like. They also deploy smartphones and mobile apps to help advisors and agents complete their documentation tasks while on the road. This is important because making notes right after a meeting instead of when you return to the office minimizes forgetting.

Still, according to Nuance, 78 percent of advisors surveyed said they would be open to using additional tools such as speech recognition to make their documentation lives easier.

So what’s the bottom line? That documentation is a pain, but it’s also crucial. Which means you should make full use of all the tools at your disposal—your company’s CRM software, mobile note-taking apps, and speech recognition technology (if available)— to take the best notes possible. As a refresher, here are some of the items you should record:

  • The “Who”: customer name and title; personnel tasked with action.
  • The “What”: the specific prospect/client inquiry/decision that prompted the action, including accountabilities.
  • The “Why”: the reason(s) the prospect/client initiated the request.
  • The “When”: the time at which the request was made and completed.
  • The Need: the specific issues your fact-finding meeting uncovered; the needs the client specifically expressed.
  • The Recommendation: the recommendations your research and analysis produced?
  • The Decisions: whether the client decided to buy or not. If the latter, why.
  • The Questions: the questions/concerns discussed and the outcomes agreed to.
  • The e-mail/fax communications: the electronic or faxed communications that took place between you and the client.
  • The “moments of truth” in the client relationship: differences of opinion between advisor and client or between client and family members; new issues arising during annual update meetings; coverage change requests; carrier underwriting decisions, especially if negative.
  • The policy illustrations: the projections used to illustrate policy performance, including the client’s signature.
  • The unusual: atypical client situations or requests, including anything that seems weird or that suggests potential future problems.
  • The arguments or complaints: any negative interactions with a prospect or client, especially those relating to a breached duty (perceived or real).

Finally, if documenting all of the above is stressing you out, remember this: if you’re ever sued, your E&O insurance defense will only be as strong as the thoroughness of your notes. Good luck!


For information on affordable E&O insurance for low-risk insurance agents, financial advisors, and real estate broker/owners, please visit EOforLess.com. For information on ethical sales practices, please visit the National Ethics Association’s Ethics Center.