August 24, 2024

Independence Questions for Firms That Sell Several Services

Multi-service firms have an extra question to answer before pitching: is this service allowed for this client? Asking late is costly.

Why this arises at proposal time

Independence limits can apply when a firm provides certain services to a client that it also assures or audits, or to related entities. The rules differ by profession and jurisdiction, and they change. Firms that sell only one service can skip much of this, but many advisory practices find that their service mix expands over time.

This post does not set out those rules. It describes how to build the routine so the right people answer the question before the pitch. Include the parent, subsidiaries and known affiliates in the check, and say who supplies them.

Know which relationships are restricted

Keep a list of clients and affiliates that fall under any restriction, maintained by your risk or independence group. BD staff should be able to look up a name without asking for a favor. Ask your risk group to say, in plain terms, which combinations of services are always off limits and which need approval.

A lookup that takes a minute is used. One that takes a day is skipped. Note the date of each screen, since an answer from last year may no longer hold.

Screen the prospect and the group

A prospect may be a subsidiary, a parent or a sister company of an existing restricted client. Check the wider group, not only the name on the inquiry. The group check is often where a surprise appears, because affiliations may not be obvious from a company name.

Record what you checked and the result, so that the answer is visible later if the proposal advances. Make sure the person who answers has the authority to say no.

Do it before drafting effort

Work spent on a proposal that cannot be sent is wasted, and a client who receives an offer that later has to be withdrawn is left with a poor impression. A pitch withdrawn after the client has shown interest costs credibility, and it is easily avoided.

Place the screen at the intake stage, alongside the basic fit questions. It should be a gate, not a footnote. Keep the wording of the answer plain, so that BD staff can act on it.

Route unclear cases to the right person

BD staff should not decide an ambiguous case. Give them a simple route: submit the details to the independence or risk contact, get a documented answer and attach it to the opportunity. It helps if the risk contact is someone BD already knows, so the question feels like an ordinary call and not a formal request.

Agree on how quickly that group will reply. Clear expectations on both sides keep the process from becoming a bottleneck. Store the answer with the opportunity, not in an email that nobody can find.

Keep confidentiality in view

Screening involves client names and relationships that are themselves confidential. Limit who can see the restricted list, and share only the result with people who need it. Some prospects will ask about your independence policies directly, so keep a short, accurate description to hand.

Any tool you use should support that separation and keep an audit trail. Treat a late change in the client's structure as a reason to run the screen again.

Write the routine down

A routine that lives in the head of one risk officer is fragile. Write a one-page description: what to check, where to check it, who to ask and how long the answer should take. Review it whenever your rules or service lines change.

Test it once a year with a real or made-up case. If BD staff cannot follow it without help, simplify it. The best routine is one that people can complete correctly on a busy afternoon.

VIPMarketing Editorial