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What You Should Disclose to Your Clients

A recurring question from advisers relates to what of their connections, activities and agreements should (really must) be disclosed to their clients, and by extension, to their regulators. Despite the lengthy texts of regulations, statutes, opinion letters and more, there are plenty of things that are not directly addressed as items that have to be disclosed.

Usually, though, it is better not to while away your time digging through the rules or searching on the internet for an exact answer to a precise situation. You probably won’t find it and even if a particular scenario appears to be close in its details, there will be something that does not match and will leave you wondering or hoping that the rule in that example does or does not apply to you, as the case may be.

In actuality, though, the test or rule for disclosure appears to be very simple. If there is something about you or your business practices that an existing or prospective customer would want to know in order to make a decision about working with you or not, disclose it. No, not every client may care about something, or anything for that matter, in reaching a decision. But as long as some person might find it useful, it should be available to them.

We are not talking about your preferences in politics, sports, dining, movies and other entertainment. The relevant information is that which drives how you do business, what aspects are outsourced to vendors and providers and what aspects get your personal attention. Thus we know we must disclose client or customer complaints, how we use and potentially share customer information, what steps we take to protect our customers and their information, what kinds of investments we will or will not recommend and why, and so on.

At the end of the day, if you think something might be of interest, then disclose it. You will be in a much better position with both your clients and your regulators if you do so. 


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