9 ways to sell the unsellable

November 22, 2012 | Last updated on November 22, 2012
2 min read

If you’re not fully securities-licensed but want to help clients get into products you can’t sell, here are a few tips:

  • Don’t directly solicit interest in the security or the issuer of the security.
  • Don’t make any specific recommendations.
  • Don’t talk too much about any given product—you’re not allowed to give advice if you’re not registered. So, avoid the specifics of the offering. Instead, simply tell the client, “I can’t place that trade, but I know someone who can, and he or she can provide the details.”
  • Understand there is a professional requirement to know who can sell a given investment. You must be prepared to refer the client to a salesperson for that product if the client asks. Referring the client to the specific security, however, would put you offside.
  • Obtain client consent to make the referral to keep you onside with privacy laws, and then provide a list of suitable dealers that can complete the transaction on the client’s behalf.
  • Tell your firm about this referral arrangement (referral arrangements can only be entered into at a firm level).
  • Have a proper documented arrangement between the firms, so each can supervise and determine who’s doing what.
  • Since arrangements must be at the dealer level, rather than advisor-to-advisor, the onus is on the dealer to give the client written information on referral fees.
  • Explain the referral arrangement in detail to the client.

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