Practitioners making the effort to combine a narrowed practice focus, a thorough disclosure system that meets or exceeds legal requirements and clear client communications reap benefits in stronger client connections, according to Jim Ruta, a 28-year insurance veteran and executive director of Burlington-Ontario based Expert Institute.
“Good communication makes for good disclosure when you know what you’re doing. Not only is it simple, it’s also easy,” he suggested at the recent Disclosure Symposium, a joint venture of the Expert Institute, Toronto-based Peel Institute of Applied Finance and Ottawa-based Milton, Geller LLP.
The narrow focus approach increases credibility of both advisor and marketing materials, he said. For contrast, he read aloud a marketing piece in which a practitioner claimed knowledge and expertise in almost every conceivable product and form of financial planning. “How in God’s name can you be good at all that stuff?” he asked as attendees chuckled at the lengthy list.
Since each product or service brings with it the potential for client complaints and liability suits, narrowing the focus also narrows the possibilities of liability, since practitioners are accountable for the advice they provide. Mr. Ruta says this information telegraphs the message that ‘if you’re going to sue me, please sue me in these areas. I have some chance here of getting out of it.’”
By comparison, a practitioner works at a disadvantage if, when faced with a lawsuit over disability insurance, he or she admits to handling only a few cases annually. That lack of expertise combines with an apparent increasing sympathy in the courts for claimants to mean potential disaster for the practitioner. “They ask this poor defenceless widowed client…” said Mr. Ruta, referring to a general scenario. “The court prefers the testimony of the little old lady and orphan over this bad, bad insurance guy over here.”
Mr. Ruta likens the practitioner who claims expertise in all financial products and services to a physician who claims expertise in all of the ‘ologies’ ranging from cardiology to urology. “We’ll even do geology in case you have rocks in your head,” he joked, paraphrasing the mythical doctor.
Disclosing specialities and exclusions and adhering to formal disclosure regulations will increase the client’s comfort level. “The law makes disclosure a requirement, but you can use disclosure as your relationship builder if you build it into the process.”
These and other considerations can be wrapped into the practitioner’s ‘business story’ and client connection letter (CCL), he said, adding that it amounts to a larger version of the Letter of Engagement. Other items to be contained include:
• Summary of privacy regulations as they affect the relationship
• The proverbial ‘other side of the coin’ with compensation, information on the practitioner’s costs of providing the services and benefits
• Potential conflicts of interest such as ownership of the practitioner’s business
• Licenses and credentials
• Benefits provided to the client
• Requirements of the client
The CCL also has a legal dimension, Mr. Ruta said, suggesting that if a practitioner finds himself or herself faced with a client complaint that has become a court lawsuit, it serves as proof of the practitioner’s professional attitude and business process.
The benefits of a well-drawn CCL also include:
• Greater client comfort level
• A professional image
• Potential referrals, managed client expectations, realistic or unrealistic.
A client who expects unreasonable service, such as weekly telephone calls needs to know that that kind of request is unworkable. “You may want to say it’s a good thing we got this out early because I can’t do that,” he said. The recent emphasis on disclosure makes it an important component of the CCL, he said.
At least one conference attendee has long since bought into that philosophy of specialization. “I’ve taken my practice in that direction,” said Bill Tufts, an independent benefits consultant with Burlington-based Mac Vanderhout Insurance Brokers Ltd. during an interview with The Insurance Journal following the symposium. In 2001, believing that the "all things to all people" approach had become unworkable, Mr. Tufts terminated his involvement with products such as life insurance, critical illness insurance, disability insurance and mutual funds and now focuses solely on employee benefits.