Advocis Protective Association

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The Best for Advisors…You be the judge

Building a Protected Practice

Presented by:

Robbert J. McIntoshExecutive DirectorAdvocis Protective Association

Building a Protected Practice

• Objective:• Advisors are focused on what they do best — building their business and providing advice

and services that protect their clients and families. All too often, though, advisors don’t pay the attention to compliance and best business practices they need to in order to ensure their own safety. This seminar, “Building a Protected Practice”, focuses on essential business practices that advisors can employ in their practices every day to protect themselves from errors, mistakes and problems that can lead to claims. A protected practice is a better practice, both for the advisor and their clients.

The Process of Practice

• “Business Process”• A business process or business method is a collection of related, structured

activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers. It often can be visualized with a flowchart as a sequence of activities with interleaving decision points or with a Process Matrix as a sequence of activities with relevance rules based on the data in the process.

The Process of Practice

• 3 types of business processes:• Management Processes

• Operational Processes

• Supporting Processes

The Process of Practice

• Management processes, • the processes that govern the operation of a system. Typical management

processes include "Corporate Governance" and "Strategic Management".

The Process of Practice

• Operational processes,• processes that constitute the core business and create the primary value

stream.

• For Advisors this is the process of providing products and services to your clients.

The Process of Practice

• Supporting processes,• which support the core processes. Examples include Accounting,

Recruitment, Application Processing, Compliance Management, etc.

Understanding Your Practice

• Everyone’s practice is unique, but, face similar risks and have similar needs

Understanding Your Practice

• What does your practice look like at a high level?

• Sole Proprietorship?

• Partnership?

• Small/medium sized business?

Understanding Your Practice

• What products and Services do you provide?• Life Insurance?

• Seg Funds?

• Mutual Funds?

• Plans?

• Exempt Market Products?

Understanding Your Practice

• You have to understand the complexity behind the products and services that you provide.

Understanding Your Practice

• You have to understand the complexity of your Clients.

Understanding Your Practice

• How does your practice operate?• Is there a concentration or distribution of business activities and

responsibilities?

• Concentrated: You’re doing it all

• Distributed: Passing off activities to staff

Concentrated Business Model

• Risks:• You have to wear too many hats;

• Sales, Administration, Compliance, Follow Up

• Unable to specialize in anyone administrative function

Distributed Business Model

• Risks• More complex administration rules required

• Delegating and “Hand Off’s”

• Monitoring of processes

• Accountability

Control versus Controls

• These are very different in both concept and practice:

• Control:• Infers a continuous “hands on” or micro-management of activities that

endlessly consumes your energy and resources

• Controls:• Infers defined business practice rules and guidelines that allow for processes

to happen without micro-management

Business Plans

• Not just for start-ups

• 2 – 3 year Business Plans help you organize and understand the growth and changes in your business

Business Plans

• Risk Identification -> Solutions Development

• Strategic Objectives

• Management Expectations

• Growth in Sales

• Hiring New Staff

• Buying or Selling a Book of Business

Business Plans

A Change in your Business

Identify the Risks

Risk MitigationStrategy

Keeping Up with Regulations

• There is just too much regulation to stay on top of!• Advocis Regulatory Affairs site and bulletins

• Advocis Chapter Meetings & Networking

• Corporate Compliance Dept Updates

• FSCO eNewsletters

• Keep up with PD/CE

• Linked In discussion groups

Business Process

• These are the day-to-day mechanics of your business

• AND

• The most likely source of claims

Business Process

• Transactional errors are the most easily addressed source of claims• Lots of paper (still!)

• Different corporate systems

• Multiple staff contact points

• Transfers between Agencies & Companies

Business Process

• How do you control all this activity?

• You don’t.

• Think “Controls” not “control”

Process Controls

• First:• Understand the processes required

Process Controls

• Develop:• Documented procedure manuals

• Staff training on procedures and systems

• Oversight and review procedures

• Monitor for change

Business Process

• What about when it leaves your office?

• Are you familiar with how things are processed?

• Do you diarize follow-ups?

• Are you familiar with company compliance procedures?• And staff? A good relationship with compliance and processing staff goes a long way

when problems occur!

Adding New Products & Services

• How do they fit into your business plan?

• What training on the product or service is available?• Your NEVER too “experienced” to learn and review!

• Go to the company providing the product

• Discuss with peers

• Do your research

Adding New Products & Services

• Evaluate the complexity of the product

• Is it regulated or not-regulated?

Adding New Products & Services

• Do a strategy & risk assessment• Why are you adding this product/service?

• How does it fit into your practice?

• Are you comfortable with answering technical questions about it?

Get & Stay Organized

• Simple? Not always and easier said then done!

Get & Stay Organized

• Organizing your space• Your desk

• Equipment

• File systems

Get & Stay Organized

• Organizing your Information• Client files

• Paper & electronic systems

• Product information

• Procedure manuals

• Email filters, bookmarks, RSS Feeds

Get & Stay Organized

• Organizing your systems & technology• Synchronized calendars

• Mobile data

Group Work

• New staff training procedures

• Oversight of processes

Disaster Prep

• Earthquake!

• Flood!• A broken pipe

• Damage/Theft of equipment• And Information

We are not alone

• Get Help and access the resources that are available to you

• Don’t rely on memory

• Document, Standardize, Follow Up

A Good Defence

• Think about your practice in terms of its operations

• Develop a good business plan that includes honest risk assessments

• Learn to manage the processes of your practice

Advise Yourself First

• You can’t advise your clients if your no longer in business

• Take a defensive approach to what you do in practice