Facebook teems with people angry about their bad restaurant meals or a fellow citizen’s sloppy driving. Before the advent of social media, they may have simply left a penny for a tip or shaken their fist at the errant driver. Today, however, they dump their anger directly onto the Internet. Lucky us!

Welcome to the strange new world of online shaming . . . where no misdeed goes unpunished, forgiveness is a dirty word, and measured response is an antiquated concept.  And it’s a world that can be especially dangerous to financial advisors whose mistakes, imagined or real, can motivate clients to wage online vendettas.

What exactly is this phenomenon? According to Wikipedia, online shaming is defined as “a form of Internet vigilantism in which offenders are publicly humiliated using social and new media. Proponents of shaming see it as a form of online participation that allows hacktivists and cyber-dissidents to right injustices. Critics see it as a tool that encourages online mobs to destroy the reputation and careers of people who made perceived slights.”

Internet shaming became popular when people began spreading nasty comments about “annoying” celebrities such as Anne Hathaway and Justin Bieber. But the practice spread to ordinary citizens behaving badly. But unlike denigrating celebrities who continue to live charmed lives, shaming ordinary people can be devastating. It can lead to them getting fired, depressed, or even suicidal. And thanks to Google, the Internet establishes an indelible record of their suffering.

How bad can Internet shaming get? Just ask Walter Palmer, the Minnesota dentist who killed the famous Zimbabwean tiger named Cecil. Shortly after his lion photo went viral, Palmer’s dental practice received 8,000 negative “reviews” on Yelp.com. People sent him death threats, mobbed his website, and even threatened to destroy his dental office. Someone even initiated a Change.org petition demanding that he be extradited to Africa to stand trial. Not surprisingly, Palmer went into hiding, putting his dental hygienist and other employees on the street.

And what about Memories Pizza, whose proprietor announced it would no longer cater gay weddings? Internet vigilantes exploded in fury at the restaurant’s perceived bigoty. But that paled in comparison to its revulsion at Martin Shkreli, the hedge-fund investor who raised the price of a generic drug for AIDS and cancer patients from $13.50 a pill to $750, turning himself into the Internet’s most hated person until he lowered his pricing under duress.

One thing we’ve learned from these events is that the public is quick to take offense and slow to forgive. We’ve also learned that their thought process is pure black-and-white. For example, the fact that Dr. Palmer may not have been personally responsible for luring Cecil away from his protected enclave did not prevent people from piling on after they saw the lion photo.

Furthermore, we’ve discovered that people crave punishments that are more severe than the original offense. When charity worker Lindsey Stone posted a tongue-in-cheek photo of herself shouting and making an obscene gesture in front of a “Silence and Respect” sign at Arlington National Cemetery, it sparked a furious shame storm. Some people called for her to be jailed; others howled for her to be raped or killed. By the evening of the first day, a “Fire Lindsey Stone” Facebook page had received 12,000 likes. Soon, she lost her job caring for adults with learning disabilities, and for the next year, she suffered from PTSD, depression, and insomnia, rarely leaving her house. Did posting an inappropriate photo online deserve such savage retribution?

Perhaps most troubling is that Internet vigilantes don’t draw a distinction between private behavior and professional responsibility. For example, Dr. Palmer was hounded for something he did while on vacation in Africa, not for an error he made as a dentist. Today, people apparently believe a service provider should be morally upstanding in every respect to deserve their patronage. A single questionable act or statement, and the relationship is history.

How should financial advisors handle this phenomenon?  Here are 10 strategies to consider adopting :

  1. Recognize that it’s only a matter of time before a client rages about you online. Can you see it now? “Worst financial advisor ever; promised me a six percent return on my annuity but I’m only getting two percent.” Or “my financial advisor is a bum; he got me into a mutual fund that’s failing to beat its benchmark index. What a jerk!” When it comes to financial advisors getting shamed online, it’s not a question of “if,” but “when.” Steel yourself emotionally for future attacks.
  2. Take a defensive approach. For example, during your on-boarding process, be sure to explain your commitment to high-quality service. Encourage all new clients to share their problems and concerns with you personally rather than taking their issues online. This will assure that problems get resolved promptly without excess drama.
  3. Avoid inappropriate personal behavior or comments directed at clients. All it takes is one careless remark or action for a client to spew resentment online. So always maintain proper business decorum and avoid making comments a client might take the wrong way.
  4. Recommit yourself to following the highest standards of business ethics. When making decisions that affect your clients, always put their interests first and act with the utmost integrity.
  5. Adhere to all laws and regulations pertaining to your license type. Periodically audit your compliance efforts to make sure you’re not missing anything. And be sure to tap the brains of your FMO and insurance/investment company compliance advisors when you’re not sure how to handle a specific practice or case.
  6. Work hard to create a loyal base of satisfied customers and engage with them frequently online. This way, if a shaming event occurs, you’ll be able to quickly rally them to your defense.
  7. Build a robust online presence on sites such as Facebook and LinkedIn, and publish frequently on industry news sites as well as on your website and/or blog. Having your own high-quality content online may help to dilute comments from haters.
  8. Make sure to actively manage your online presence so you can detect problems immediately. Google Alerts is a tremendous free resource for tracking what people say about you on the Internet, and there are a number of other paid resources, as well.
  9. If you ever become the victim of Internet shaming, respond quickly. Apologize immediately and take down the offending post or tweet. This may not prevent others from seeing it, but it may help to contain the damage.
  10. Finally, realize that when it comes to preserving your professional reputation, it’s no longer business as usual. To protect your good name and prevent errors-and-omissions insurance claims, keep close tabs on your words, actions, and business procedures. Avoid controversy in your personal life and refrain from posting inflammatory words or pictures on the Internet, especially of lions, pizza, or cemeteries!

For more information on affordable errors and omissions insurance for low-risk insurance agents, investment advisors, and real estate broker/owners, please visit EOforLess.com. For information on ethical sales practices, please visit the National Ethics Association’s Ethics Center.

By Cindi R. Hill, CFP, IACCP

At the NAPFA Conference earlier this month I gave a presentation on compliance.  I was unaware that in the back of the room Samantha Allen, a reporter for Financial Planning magazine, was taking notes.  Below are the tips she posted on the Financial Planning magazine website after my talk.

  1. Form ADV 1 & 2. These are the first things regulators will look at, Hill says, so be very careful about what you say. Advisors must give ADV part 2 to every new client within 48 hours. Clients get five days to rescind and get all their money back.
  2. Update ADV annually. Every year in the first quarter, firms must complete the annual updating amendment. Review parts 1 and 2 of Form ADV and make any necessary changes, she says.
  3. Watch your word choice. “Think about the words you are using in the website,” Hill urges. Don’t use “unbiased” or “no conflicts of interest”— everyone has a bias and everyone has a conflict, she says.
  4. Every firm must designate a chief compliance officer. This person — you if you are solopreneur — must be competent and educated in your state’s rules, Hill warns, and this is not such an easy task.
  5. Treat examiners like people. Examiners are going to ask you questions, and you may not know the answers, Hill notes. Be willing to say, “I don’t know” or ask questions. And Hill urges planners to be polite: “These people can shut you down and you’re treating them like that?” she asks rhetorically.
  6. Pay attention to state rules. “Every state has its own compliance requirements,” Hill says. State rules sometimes look like SEC rules, but not always, she warns. A big thing to watch for now is a business continuity rule from some state regulators.
  7. No testimonials. Be careful, Hill urges, there are  many different things that can be counted as testimonials. Endorsements on LinkedIn, for instance, are not allowed.
  8. Manage social media with care. Your LinkedIn profile page and company page are considered advertising, Hill says, so watch what’s on there. For Facebook pages, if your business name is on it or there is a social media feed from your business displayed, that’s advertising. If you keep the page personal, Hill warns, “don’t be too specific about what your firm does.”
  9. Keep a complaint folder. Look up and follow the definition of complaint in your state, she says, and if you’re not sure whether an email or other communication fits the bill, put it in the folder.
  10. Be careful what you say to the media. Advisors should avoid mentioning specific mutual funds or products in articles. If you do, Hill says, you must meet various requirements — such as disclosures — and that’s difficult to do in an interview.
  11. Understand advertising rules. Most states follow the SEC’s rule, but be careful, Hill says. For instance, you can’t say “approved” or “registered” without following specific instructions listed in the form ADV. Advisors should also keep an advertising folder with all advertising material.
  12. Keep files. Be careful about what you remove, Hill says; you need to keep at least two years, but examiners can look back five. Do not hand over documents older than five years, she says, as that can result in fines.
  13. Keep emails. Be aware of how you’re going to give them this data, Hill says. They usually want .pst files, and typically they ask for a range of time, but they can ask for up to five years.
  14. Record every transaction. You’ll need a record for each client that chronicles every transaction ever made, Hill says. And if you don’t track this yourself, you’ll need to know how to pull the information from a custodian’s account.
  15. Trading in client accounts. If you do this, you must be able to show what authorizes you to do so, she says.
  16. Solicitor registration. Follow state rules for this. If anyone is soliciting business for you, Hill says, make sure they are registered as needed based on state rules.
  17. Cybersecurity safeguards. This is going to be a big area advisors must pay attention to. Make sure to educate your clients about these issues, Hill says. “Clients are your weakest link; if they open up your firm to being hacked, you’re in trouble.”
  18. Code of ethics rules. Not all states have them, Hill says, but some states do have rules about transactions that advisors must adhere to.
  19. Privacy notice. You must send this to every client every year along with ADV part 2. “Snail mail is okay,” she says, but to send electronically, advisors must first have permission and documentation from the client agreeing to receive that type of communication.
  20. Client contract. This must include the services you provide and your fee schedule and whether you offer services to other clients. These should also include when the agreement terminates. If you take discretion, it is assumed you vote proxies unless you state otherwise, Hill says.
  21. Arbitration clause. Find out what your state requires, Hill urges. Don’t use someone else’s, because it changes frequently, she says.
  22. Disclosure. You must have disclosure or a visible link to your disclosure on every page of your website.
  23. Act like a fiduciary. More than a standard, “fiduciary is a lifestyle,” Hill says, and advisors should look at everything through that perspective.

Cindi R. Hill, CFP®, IACCP® of Hill Compliance Advisors provides comprehensive compliance services and solutions for the financial professional who is a Registered Financial Advisor (RIA).  As a virtual compliance consultant and former RIA herself, Ms. Hill performs compliance tasks, allowing the financial professional to run their business and spend their quality time with clients. See her website at www.hilladvisers.com for more information or to subscribe to her blog.

For more information on ethical business practices, please visit the National Ethics Association’s Ethics Center. For more information on affordable errors and omissions insurance for low-risk insurance, investment, and real estate professionals, visit EOforLess.com



As a real estate or financial-services professional, you care about cyber-security because suffering a data breach is a highly damaging and expensive episode. But you also should care about the integrity of your clients’ other personal information because when it is compromised, it affects their ability to do business with you. And caring is also the right and ethical thing to do.

That’s the message of a recent article in Inman News that encouraged real estate broker/owners to make their customers aware of resources that can help to reduce the risks of identity theft and mitigate loss should one occur.

Written by Nabil Captan, founder and CEO of Captan & Company, the article suggests that real estate brokers and owners should make their customers aware of three things:

  • First, that identity theft risk is increasing rapidly. According to Captan, the FTC received 330,000 identity theft complaints from consumers in 2014. There have also been many large data breaches that have compromised the identities of millions of customers at Anthem, JPMorgan Chase, Target, and Home Depot, as well as taxpayer accounts at the Internal Revenue Service.  Even more worrisome is research from FICO, the entity that creates credit scores, showing that identity thefts at bank ATMs have increased 174 percent during a recent quarter, while those at non-bank ATMs have increased by 317 percent.

  • Second, that it’s important to respond decisively after an identity theft. To that end, the U.S. government has launched an all-in-one consumer resource called IdentityTheft.gov, which provides tips, letters, and checklists for consumers to follow in the event of an identity-theft incident.

  • Third, that consumers should arrange for a credit freeze rather than just relying on an extended fraud alert. According to the author, the former technique may be more effective in the event a consumer’s identity is stolen. Unlike free fraud alerts for a given time period, the author says a credit freeze actually stops the three credit bureaus from sharing a consumer’s credit file, in effect blocking a merchant from opening a potentially fraudulent new account.

Discussing the above three points with your customers will help them prevent identity theft or minimize losses should one occur. And don’t forget, helping your customers in this fashion will build good will, which in turn will reduce complaints and  errors-and-omissions insurance claims should you have a customer dispute in the future. So by helping them keep their identities safe, you’re also helping to lower your own business risks.

For more information on affordable errors and omissions insurance for low-risk real estate broker/owners, please visit E&OforLess.com. For information on ethical sales practices, please visit the National Ethics Association’s Ethics Center.