This time-saving trick gets advisors fired. Don’t do it
Q: I have a number of elderly clients. It’s difficult for them to come in and sign documents, and if I overnight it to them they often come back signed in the wrong place or otherwise incorrectly filled out. To make life easier for my clients I’ve had them sign blank forms, and then I’ll fill them in as needed. I’ve never used those forms improperly, but I’ve heard that if my firm finds out I can be in big trouble. I’m doing this to help my clients. Why would this be a problem?
A: First of all, it’s not a question of if your firm finds out but when they find out.
I understand this is a fairly common practice and that reps do it to help the clients and save them the hassle of coming into the office (or to be frank, it saves the rep having to go to the client’s home). But the bottom line is that FINRA views this as a violation of Rule 2010 (“observing high standards of commercial honor and just and equitable principles of trade”) because it puts the clients at a huge risk of theft and fraud.
Your firm likely also has policies and procedures that prohibit this practice. Even though you mean well and would never misuse those forms yourself, other people are not so righteous. Too many reps have abused this process. Not to mention, there’s an additional risk that someone could steal the pre-signed forms.
Let me be blunt: This practice will cause you to get fined, fired and suspended. You should immediately destroy any pre-signed blank forms you may have and hope your compliance officer never finds out you had them in the first place. If it’s a hassle for your elderly clients to come in to your office, and they fill the forms out incorrectly when you mail them, then bite the bullet and go visit them at their homes.
Trust me: It’s a small price to pay when the alternative is your career.