10 Ways to Make Sure Your Practice Stays Compliant

Compliance isn't a favorite part of the job for any advisor — but that doesn't mean it isn't important. Healthy compliance practices protect your business from regulatory headaches. Even more importantly, compliance exists to protect your clients and their investments. Taking compliance seriously isn't just about checking boxes; it's about looking after your clients' best interests.

Below, we share 10 compliance tips that will keep your practice running smoothly. 

Prepare for Branch Exams Proactively

• The Process: Most exams take less than an hour because the auditor reviews your emails, files, and advertising before the meeting.
• Action Items: Make sure your planned vacation dates are entered into the out-of-office tool in ClientWorks so an auditor doesn't show up virtually or in person while you are away.
• Location Matters: If your office is in Maine or Virginia, you will have an in-person audit every single year. Otherwise, expect one every three years.

"Make sure you're keeping up with your ClientWorks dashboard notifications and your advisor compliance tool alerts."

Secure Your Social Media

• The Rule: Any static or active business social media profiles — especially LinkedIn — must be monitored and archived via Social Patrol.
• The Setup: First, complete the "social media training" course in the Learning Center. Then, submit the social media onboarding form in ClientWorks.
• The Cost: It costs $85 per year (paid for by the advisor) and allows you to link up to three accounts.

"One of the most common audit findings is not having LinkedIn profiles (and other social accounts) linked to Social Patrol."

Avoid Homemade Consolidated Reports

• The Risk: Auditors are heavily scrutinizing email surveillance for homemade financial snapshots. You cannot use Excel, Word, PowerPoint, or unapproved third-party vendors to create account summaries for clients.
• The Solution: If a client emails you asking for their account balance, you must attach an official LPL statement for reference, showing the exact, approved amount.
• The Approved Tools: LPL Client Reporting, Albridge Wealth Reporting, Black Diamond® Wealth Platform, Fortigent, Orion Advisor Services, Portfolio Review Report.

"Consolidated report violations are often found in email surveillance."

Protect Personally Identifiable Information (PII)

• The Requirement: You must have a signed Form F456 on file to obtain explicit client consent before sharing their information.
• The Scope: This applies to sharing info with anyone, including the client's tax advisor, legal advisor, family members, or even a spouse.
• Delivery: When you do share approved information, you must use secure, encrypted methods.

"If you're sharing any information with a spouse, even if it's over email, you are going to want to make sure you have Form F456 on file."

Restrict Office Mail Access

• The Vulnerability: LPL prohibits non-fingerprinted individuals from handling your mail.
• The Solution: If you are in a shared space, you must get a P.O. Box and update your mailing address with registration to ensure the chain of custody is secure.

"This often happens in shared office arrangements where a communal receptionist sorts the mail."

Log Form CRS Deliveries

• The Gap: While e-signature packets automatically log Form CRS delivery, wet-signed documents do not.
• The Process: For physical paperwork, go to ClientWorks > Menu > Compliance > Form CRS. This tool allows you to log the delivery and email the form directly to prospects or clients.

"When making a recommendation to a client, it's important to not only share Form CRS with a client, but you're also logging delivery of it, especially if the client wet signs the documents."

Monitor SAM Account Objectives

• The Alert: You will receive a "Proactive Surveillance" (ProSurv) alert with more conservative investment objectives that have high overall equity
• The Resolution: You have two choices — ClientWorks Trading Worksheet or ClientWorks Rebalancer — to help effectively manage target allocations across SAM Accounts.

"The ProSurv alerts happen most when the stated investment objective in ClientWorks doesn't match the investment objective of the assets within the account."

Keep Detailed CRM Notes

• The Standard: Documenting interactions is vital for compliance defense.
• The Tools: You can use the free ClientWorks CRM or an approved third-party CRM, such as Redtail or Wealthbox.

"Be sure to consistently log your annual advisory client reviews and keep detailed notes of your client meetings."

Follow Strict Client Death Protocols

• The First Step: Immediately notify the LPL estate team (866-866-0405); you do not need to wait for a death certificate to report it.
• The Restrictions: LPL will halt trading, stop advisory billing, cancel open orders, and turn off automatic money movements. Power of Attorney (POA) and trading authorizations instantly void upon death.
• Reminder: New trade instructions can only be accepted once LPL receives a death certificate for the deceased, new account paperwork has been received, and existing assets have been journaled into the beneficiary or executor account(s).

"LPL cannot honor trade instructions from beneficiaries or executors within the original decedent's account."

Verbally Verify Emailed Instructions

• The Rule: Never process a trade or move money based solely on an email or a voicemail.
• The Procedure: Always call the client at the verified phone number you have on file to confirm the instructions verbally.
• The Liability: Fraudsters frequently compromise emails. If you execute a fraudulent emailed request without verbal confirmation, you, as the advisor, can be held financially responsible for the loss.

"As a best practice, when contacted via email for trades or money movement, include 'per our conversation' or 'give me a call to discuss' in your reply. This provides evidence that the request was verbally confirmed per policy."

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Here are several other critical details and operational rules that will help you keep your practice compliant and running smoothly.

Computer & Office Security

• IT Audit Requirements: During a virtual WebEx audit, examiners will check your computer settings. You must have your screen lock set to 15 minutes or less, use passwords that are 12 characters or longer, and have your anti-malware, firewall, and encryption turned on.
• Third-Party NDAs: If you use contracted third-party providers who have physical access to your branch office, you must have a signed Non-Disclosure Agreement (NDA) on file for them.

Marketing & Client Communications

• Mass Mailings: Any mass mailing sent to 25 or more people must be submitted for approval before it is sent out. You are also required to upload the distribution list for the mailing to the advertising review tool.
• Verifying Client Assets: If a client asks you to verify their assets (for example, for a mortgage application), you cannot type up a letter on your own letterhead. The home office must complete all asset verification requests by submitting Form F704.

Trading & Discretion

• Time and Price Discretion: If you exercise time and price discretion for a brokerage account, remember that it is only valid for the same trading day the order is placed. The discretion automatically expires at market close.
• Full Discretion Approvals: You cannot exercise full discretion in an advisory account without first applying for and receiving firm approval by completing Form F614A. Additionally, LPL strictly prohibits any form of discretionary trading involving structured products.

Staff Permissions

• Licensed Assistants: Assistants with active licenses may accept unsolicited trade orders from clients. They can also qualify prospects by discussing their financial status, investment history, and overall goals.

• Non-Licensed Assistants: Unlicensed staff members are strictly limited to clerical and administrative matters. They cannot discuss investments, solicit clients, or accept unsolicited trade instructions. They may only enter trades if you, the advisor, have already spoken to the client and given the assistant explicit direction to do so.

Reporting & Recordkeeping

• The 5-Day Complaint Rule: You are required to log any client grievance — whether it is submitted to you in writing or spoken verbally — within 5 days of receiving it.
• Gifts and Entertainment: You must adhere to strict limits regarding gifts given or received: a maximum of $500 per calendar year for non-industry individuals, and $100 for individuals within the securities industry. All gifts must be reported to the compliance office, with exceptions only for immediate family or LPL employees who are not your clients.
• Check Logs: If you physically touch a client's check, you must log it on the check receipt log, keep a copy, and upload the log quarterly. The only exception is if you use remote check deposit, which does not need to be logged.

Your Support Team

We know that compliance can be a lot for you to handle as an advisor. We hope this guide serves as a useful framework that makes your compliance operations both more efficient and more effective.

If you have any questions about compliance best practices or current regulations, please reach out to: Stephanie Demetrelis, Sheryl L. Raetz, or Cameron Roney.