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Trust is a critical element in the client and broker/agent relationship. Achieving trust may be enhanced when there is a clear understanding between the producer and the client of the services being provided and the cost of those services. To help build that relationship there are numerous approaches firms can use in communicating with clients.

It is important to remember that any engagement letter or other formal statement of services that are to be provided creates a contractual commitment – you must do what you say you will do or you create potential liability for your failure to do so. Any disclosure documents therefore must be developed based on a firm’s actual business practices (or the documents must dictate those practices going forward), and the principles articulated in any such documents should be indoctrinated in the firm through its ethics policies and training programs.

The following are suggested examples of approaches which can be taken to provide information to clients. The Council does not intend to suggest that any particular approach is correct or that any disclosure whatsoever must be given. The material should be modified to fit an individual firm’s particular business situation. These types of determinations must be made on a firm-by-firm and even client-by-client basis. The Council intends to modify these materials as circumstances warrant going forward, including adding sample disclosures to respond to any legislative developments which may occur.

Client Disclosure Information Index

  1. Nature and Scope of Services to be Provided
  2. Fee Arrangements
  3. Instructions to Sign and Return Letter
  4. Other Provisions

Additional Resources

NAIC Model Producer Law (PDF)