Advisers adopt "clean-desk policy’ to limit compliance concerns

Adviser Mark Penske requires all his employees to clean their desks — including clearing all paperwork — before leaving the office each day.

“You have to make sure ab-solutely no client information or statements are left out,” said Mr. Penske, chairman and chief executive of United Advisors Wealth Management. “If papers are left on desks, the cleaning staff or anyone else would have access to it and could just grab one piece of information.”

Clean-desk policies have become more widespread among advisory firms as compliance worries continue to mount.

Many states are considering stricter compliance regulation, and leaving only a couple of documents out could make financial advisers vulnerable to penalties, said Barry P. Schwartz, founding partner of consulting firm ACA Compliance Group.

He pointed out that advisers’ policing themselves by creating clean-desk policies will help protect them against scrutiny from regulators. A particular worry would be if 401(k) statements — which include clients’ Social Security numbers, account numbers and other personal information — were left unprotected.

Mr. Schwartz encourages firm leaders to walk through the office at night and grab any papers that are left on desks. He added that he often takes documents that have been left out to use in a presentation with the firm’s staff to highlight potential problems.

“If you walk by a bank branch, you don’t see a single piece of paper on anyone’s desk,” Mr. Schwartz said. “That’s the kind of process that we want to see with investment advisers.”

All documents should be put in a locked drawer, Mr. Schwartz said.

“It’s a matter of limiting risk. If you’re looking to limit risk and share information, you need to think about anyone who might be coming into the office after hours,” Mr. Schwartz said.

“Practically speaking, the office needs to be vacuumed,” he said.

Other firms have chosen different strategies to protect client information.

Robert Siegmann, chief operating officer and senior advisor with Financial Management Group Inc., which manages $175 million in assets, said that his firm considered implementing a clean-desk policy, but instead decided to prohibit access to anyone outside the firm at night. The cleaning crew is allowed in only during business hours, and employees take the trash outside themselves.

Mr. Siegmann said that he may leave client information on his desk, but he feels secure knowing that no one else would have access to that information after hours.

“Nobody has access to my office,” he said. “It’s locked to non-employees.”

Shop Talk is a regular column detailing how financial advisers run their businesses. The column focuses on unusual or innovative ways to attract more clients. -Suggestions or tips for Shop Talk? E-mail Lisa Shidler at [email protected] or visit the Shop Talk page at InvestmentNews.com/shoptalk.