A few years ago, I defended a financial advisor over a bee sting.
The customer wanted to take the cash value out of a life insurance policy to buy a second home. The advisor cautioned against doing so before completing underwriting on a new policy. The customer ignored this advice, contacted the company directly, and liquidated the policy before completion of the underwriting process.
While waiting for underwriting to conclude, the client was stung by a bee and died. His wife sued the broker-dealer and the advisor for letting the client cash out the policy before underwriting was complete on the new one.
Fortunately, the advisor took the time to document his advice to the client in contemporaneous notes. In the end, the case ended well for the broker-dealer and advisor because the notes reflected the caution that the advisor provided to the client. So what is the lesson to be learned other than knowing if you allergic to bees.
Notwithstanding the fast paced world in which we live, it is critical for you to document, in some fashion, the advice that you provide to your clients. You can write letters or emails or, at least, have contemporaneous notes in your file. Documenting client contact is even more important when a client ignores that advice.
Often cases are won and lost based upon the respective credibility of the customer and advisor. That credibility pendulum will likely swing in your favor if you have paper trail of all of your advice to your clients. Without a paper trail, a bee sting will be more than a bee sting.