The write stuff: How to protect yourself with a proper paper trail

Correct Complete Contemporaneous Current It is easy to say that record keeping must be accurate, but that means that everyone on your team must work together with systems that ensure the information in the file is correct. For the information to be correct, it must also be complete and current. If the information is incomplete […]

By Ellen J. Bessner | October 27, 2003 | Last updated on October 27, 2003
5 min read
  • Correct
  • Complete
  • Contemporaneous
  • Current

It is easy to say that record keeping must be accurate, but that means that everyone on your team must work together with systems that ensure the information in the file is correct. For the information to be correct, it must also be complete and current. If the information is incomplete or outdated, this could have an effect on the suitability of — among other things — your investment recommendations.

Recently, the Financial Planners Standards Council (FPSC) proposed practice standards that incorporate certain record keeping elements. Instead of a standard know-your-client form, the FPSC describes in more precise terms the information required to formulate a plan for any client. Such a plan is set out in a written financial planning report.

The FPSC also intends to introduce the concept of an engagement letter to formalize the mandate of the CFP. Such a letter must be complete and correct and must be updated if any element in the plan is affected by any client change. The FPSC draft practice standards compel CFPs to update the engagement letter every year.

If an advisor keeps written records, including notes from all telephone conversations and meetings, and sends letters to the client from time to time confirming his mandate and explaining the risks associated with any investment recommended, the advisor will be in a better position to defend himself when the regulator or client comes a-knocking.

• • •

Ellen J. Bessner is a partner at the law firm Gowling, Lafleur, Henderson, LLP with expertise in defending advisors and branch managers against their clients and regulators and offers compliance training to both advisors and branch managers for CE credits. For more information, please click here.

• • •

Advisor.ca can also help you put proper systems and paper trails in place to protect your clients and yourself. For a guide examining the importance of written engagement and disclosure and a customizable “starting-point” template to help you produce your own engagement and disclosure document, please click here. For our customizable investment policy statement (IPS), please click here.

(10/27/03)

Ellen J. Bessner

  • Correct
  • Complete
  • Contemporaneous
  • Current

It is easy to say that record keeping must be accurate, but that means that everyone on your team must work together with systems that ensure the information in the file is correct. For the information to be correct, it must also be complete and current. If the information is incomplete or outdated, this could have an effect on the suitability of — among other things — your investment recommendations.

Recently, the Financial Planners Standards Council (FPSC) proposed practice standards that incorporate certain record keeping elements. Instead of a standard know-your-client form, the FPSC describes in more precise terms the information required to formulate a plan for any client. Such a plan is set out in a written financial planning report.

The FPSC also intends to introduce the concept of an engagement letter to formalize the mandate of the CFP. Such a letter must be complete and correct and must be updated if any element in the plan is affected by any client change. The FPSC draft practice standards compel CFPs to update the engagement letter every year.

If an advisor keeps written records, including notes from all telephone conversations and meetings, and sends letters to the client from time to time confirming his mandate and explaining the risks associated with any investment recommended, the advisor will be in a better position to defend himself when the regulator or client comes a-knocking.

• • •

Ellen J. Bessner is a partner at the law firm Gowling, Lafleur, Henderson, LLP with expertise in defending advisors and branch managers against their clients and regulators and offers compliance training to both advisors and branch managers for CE credits. For more information, please click here.

• • •

Advisor.ca can also help you put proper systems and paper trails in place to protect your clients and yourself. For a guide examining the importance of written engagement and disclosure and a customizable “starting-point” template to help you produce your own engagement and disclosure document, please click here. For our customizable investment policy statement (IPS), please click here.

(10/27/03)