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As the wealth management concept becomes a significant shaper of distribution strategies, there are several regulatory and legal considerations companies must address as they work to broaden their portfolios.

By Peggy Bresnick Kendler

As the wealth management concept becomes a significant shaper of distribution strategies in insurance and other financial services segments, there are several regulatory and legal considerations—including privacy and licensing issues—companies must address as they work to broaden their portfolio of offerings.

According to Shaun Mathews, president, ING Financial Horizons (Hartford), "Given the comprehensive nature of a wealth management relationship with a customer, privacy is an issue that financial services companies must take seriously. At ING, protection of customer information is of the utmost importance. Also, insurance companies will find themselves with more sophisticated distribution channels as the industry moves from Series Six to Series Seven and advisory designations. It will also become increasingly important for representatives (and insurers' own career forces) to have additional designations, such as certified retirement counselor or certified financial planner. These designations suggest competency and advanced training, critical in setting yourself apart as one who can manage a person's assets in a sophisticated fashion."

Agreeing that "privacy considerations are paramount," Lisa H. O'Day, vice president, advanced sales/program development and management, Jefferson Pilot Financial (Greensboro, NC), notes, "people don't want their personal information shared amongst others, including home office people who often consult with agents on how to look at a client's situation and make a variety of proposals on options the client may choose from. Client information must be kept confidential."

A significantly higher level of compliance monitoring is required as part of a wealth management strategy, stresses Shaw Lively, research manager, Financial Insights (Framingham, MA). "Specific product disclosure and agent licensing or certification requirements aside, wealth management requires higher-level suitability and advisory compliance monitoring," he says. "Customers will be asked to disclose details about their financial accounts at other institutions. Companies must guard against misuse of this information for heavy-handed sales tactics, or unwanted solicitation."

Information access is another tricky matter, Lively says, noting, "data sharing is the most sensitive aspect of wealth management and must be managed through a thorough permission management process and a technology solution that allows for control of the data and monitoring of use."

Nor should carriers underestimate the importance of providing agents/advisors with the proper tools and support, according to J. Maxey Sanderson, vice president, product development, Impact Technologies Group, Inc. (Charlotte). "A major concern of anyone supporting advisors in the wealth management arena is that the agent turned adviser may exceed his or her capabilities," he says. "Technology and training are the only ways a system can be accomplished so that the planner provides appropriate and consistent advice without requiring all planners to be experts in all fields."

More information about creating and supporting an effective wealth management strategy will appear in the upcoming June issue of Insurance & Technology, appearing soon at

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