Financial professionals—life, health, and P&C agents and registered investment advisors—must promote themselves in order to grow their firms. That means selling their capabilities using multiple promotional methods. One of these is seeking professional awards and designations they can use to enhance their credibility and differentiate themselves from their peers. But doing this can be a slippery slope, leading to mistakes that attract regulator attention. A new SEC investor bulletin explains why.

According to the report, “Financial Professionals Use of Professional Honors: Awards, Rankings, and Designations,” advisors using these techniques often imply they have a higher degree of sophistication, knowledge, or success than their competitors. “While in some cases this type of information may help an investor make an informed decision in choosing a financial professional,” writes the SEC, “in some cases it can be misleading (since) some professional awards, rankings, and designations provide little or no basis on which to judge the skill or abilities of the (advisor).”

The SEC’s problem is that many awards, rankings, or designations provide no way for consumers to determine just how meaningful they are or even if they’re meaningful at all. That’s because:

  • The standards for receiving the honors are so minimal just about any advisor off the street could apply—and qualify—for them.
  • Many advisors simply pay a fee to receive the award, ranking, or designation.
  • Or all they have to do is join the organization that sponsors the honor.
  • Sometimes advisors claim they are among the top winners of the honor when in fact there is no ranking method in place.
  • Many also misrepresent local or regional honors for national ones.
  • Some apply for honors using false or misleading information, leading to awards, rankings, or designations that are unfounded.
  • And others continue to use professional designations after they lapse.

The SEC ends its alert by urging consumers to probe for what an advisor’s honors really mean. For example, what was the application process, what standards were in place, what group bestowed the honor, and what money may have exchanged to “procure” the award? It also encourages consumers to do their due diligence on advisor designations by visiting the FINRA online resource, “Understanding Investment Professional Designations.”

The SEC’s alert reinforces what the National Ethics Association has been saying for years. Insurance and financial professionals have much more to gain by playing straight with their prospects and clients than by misleading them. Exaggerating their credentials only creates false expectations that can lead to consumer disappointment, E&O insurance claims, and regulatory sanctions down the road. Don’t subject yourself to these risks. Always “sell straight” by presenting only verifiable facts about you, the products you sell, and the companies you represent. This is the best way to build a successful and sustainable financial services firm. Good luck!


For more information on ethical business practices, visit the Ethics Center at the National Ethics Association, sponsor of EOforLess. 

In ancient Greece, the famed philosopher Diogenes walked the daylight streets with a lantern in search of an honest man. In your work as a financial professional, do you ever feel the same way . . . that way too many of your customers have lost touch with the truth? If so, you’re not alone.

In the sales process, prospects often tell “white lies” to deflect you. They say they can’t meet with you because of their doctor’s appointments (no such thing), their existing products or services (no such things), or their relationship with another provider (no such brother-in-law). If you do get to meet with them, they may tell more serious lies, such as hiding material information or masking their true motivations for buying insurance or investments.

Now, don’t get us wrong. The vast majority of customers are truthful. But the lying happens often enough to get under your skin. In fact, as one businessperson commented, “You don’t know whether to laugh or to get mad at clients for thinking you are stupid.”

What’s more, deceitful customers pose a risk to your business. If they’re willing to lie to you, what does that say about their character? Would they also be willing to fabricate an errors-and-omissions claim for personal profit?

So what do you do when a prospect or customer lies to you? The answer depends on your assessment of the magnitude—and context— of the lie. For example, if a prospect gives you a phony excuse for breaking an appointment, do you simply banish them from your prospect list? Probably not, since if you did this with every fibbing prospect, you wouldn’t do much business. Rather, try to view such “white lies” as buying objections. As such, you want to meet them head on, respond to the underlying concern, then attempt to close the sale again.

If a lie is serious—for example, generating false information that hinders the appropriate sale of your product or service—then watch out. People who tell such lies are trouble magnets. You ultimately need to consider whether they’re worth dealing with and whether you want to jeopardize your errors-and-omissions record on their behalf.

So the next time a prospect or client lies to you, take a deep breath, then . . .

  • Give the person the benefit of the doubt. Don’t automatically assume someone is lying. Probe to see if there’s a misunderstanding.
  • Call the lie out. When you hear a lie, don’t just let it pass. Let the client know that it’s in both of your best interests to be completely forthright. Then ask for a clarification.
  • Encourage the individual to come clean. When the person admits to lying, give them another chance. If the lying persists, reconsider whether you want him or her as a customer.

Finally, don’t be afraid to keep your truth lantern lit during the day. Like Diogenes, you want the world to know how much you value the truth—and welcome those who speak it.

For more information on reducing your errors-and-omissions insurance liabilities, please visit our E&O Headquarters at