How Advisors Stay On Top Of Mountains Of Paperwork Requirements

Like many professional service providers, financial advisors tend to enjoy interacting with clients and solving their problems. But they dread the paperwork.

Completing forms accurately and promptly demands ongoing diligence. And compliance requirements elevate paperwork from an important nuisance to an essential element of a successful financial advice practice.

Tackling administrative and support tasks, such as filing and archiving digital communications, can seem manageable for advisors who are just starting out. But as a practice grows, high volume can put your paperwork systems and procedures to the test.

Technological advances are leading some independent advisors to go paperless. But the initial investment in time and money — and the learning curve associated with transitioning to online communications and documentation — remains an obstacle for many financial planners.

“I don’t like paperwork,” said Dan Carter, an advisor in Oxnard, Calif. “I’m more of an extrovert. But we have to do all the paperwork in a timely manner for our clients.”

In his 18 years as an advisor, Carter has learned to delegate support tasks to a reliable assistant who has a keen eye for detail. When meeting new clients, Carter introduces his assistant — who’s also his wife — as a key member of his team.

“That way, they get to know her and she builds rapport with them,” he said.

Carter uses Dropbox, a cloud-based file-sharing and storage service, to leave notes for his assistant. She checks them daily and follows through, often by submitting client data to third parties, such as insurers.

Tennis, Anyone?

In working with financial institutions and insurance companies on behalf of his clients, Carter knows that paperwork errors can occur despite his best efforts. When his assistant gets backed up and he completes client forms, he can hit a few temporary roadblocks.

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“Sometimes I fill out a new client application and it gets kicked back to me,” he said. “It’s almost like a tennis game.”

Rather than enter client information multiple times in multiple fields, for example, Carter may provide it in the first section of the application and then write “See Section 1” when asked for the same data again. That rarely works.

“They don’t like that,” he said. “They don’t want to fill out my paperwork for me.”

In 2014, Carter stumbled when trying to help his clients — a wealthy married couple — apply for life insurance. The carrier’s medical underwriters repeatedly attempted to schedule a meeting with the couple to no avail.

“Some of it was our fault,” he admitted. “We weren’t on top of it and we didn’t follow it all the way through. The process took three to four months, and I got weary of apologizing.”

Carter wound up losing the clients. But he tightened his procedures after the incident and now monitors communications with insurers more closely.

The simplest paperwork tasks can pose some of the greatest challenges. Every year, advisors track the required minimum distribution (RMD) that certain clients must withdraw from their retirement accounts. It’s straightforward, but problems can erupt.

Robert Braglia, a certified financial planner in New York City, cites a rare case when he realized belatedly that he didn’t prepare for a client’s RMD well before the Dec. 31 deadline.

“It created last-minute stress,” he said. “Now I have a spreadsheet with every client that has a RMD. I’m ready as the fourth quarter rolls around.”

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Better Communication

As an advisor’s practice grows, the office staff’s role grows as well. Managing the many details of client accounts demands clear communication among an advisory firm’s employees.

Michael Resnick, a certified financial planner in Deerfield, Ill., appreciates the value of completing paperwork with accuracy and timeliness. In his five years as an advisor, he has sought to continually refine his internal processes to prevent paperwork errors.

About three years ago, Resnick helped a client purchase a large life insurance policy. He asked his assistant to fill out the application.

“The owner of the policy was supposed to be my client’s trust,” Resnick recalled. “But my assistant mistakenly made my client the owner.”

Resnick caught the error at the last minute and fixed it. But had the mistake gone unnoticed, it could’ve triggered adverse tax consequences for the client.

“After that, we changed how we communicate,” he said. “I learned when I ask an assistant to do something, I need to be very clear on the circumstances behind it so that everything is done properly.”

He also credits his customer relationship management (CRM) system for helping him track client communications and process paperwork. And after recently reading “The Checklist Manifesto” by Atul Gawande, Resnick is creating checklists to avoid errors.


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