One simple strategy to avoid trouble with clients

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If brokers are open and honest with clients, then errors in audits, administration, risk management, claims advice, corporate policy, interpretations of legislation or tax—in any of the areas that an advisor is responsible for—then you have nothing to worry about.

But you need to know your material, especially if you’re new to the business. “It’s what you don’t know that can hurt you,” says Zoltan Barzso, president of Accurate Design Benefits. “You might remember that a benefit is tax-free but you might forget that the maximum paid is 85%.”

“Or you might forget to mention that a client has to charge retail sales tax,” he says. “If a client bills an employee at $1 per $100 of LTD coverage, instead of $1.08—the eight cents is for sales tax—then the client may be liable, according to Canada Revenue Agency.” LTD benefits paid by an employee are non-taxable, but those paid by an employer are taxable.

Meaning that, eventually, the advisor could be liable. As with clients, an advisor needs insurance for insurance—in the form of ‘adequate errors and omissions’ insurance.

Advisors should also always seek information from a provider when a client asks for an interpretation because an advisor should never place himself or herself in the position of an insurer.

Which brings us to the simple strategy to avoid mistakes and problems: put everything in writing. Including disclaimers. Everything.

Political and philosophical conflicts

You solve the non-clerical mistakes case by case, because they involve politics, a possible policy change, different interpretations, or just plain disagreements.

Barszo tells the story of one employee, an executive, who called him in a panic because the exec had submitted claims 68 days after a due date. “The cut-off was 60 days,” says Barszo. “The client had laid him off. I called the client, who said they wouldn’t pay the ex-employee for the claims. The provider could have covered the claims, but the client still stuck with the no. This is an example of when things get political.”

Read: Employees pay price for benefit mistakes

Or nasty. Did I mention put everything in writing?

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Transcontinental Media G.P.