It’s been said that the only place people reach their full potential is on their resumes. In fact, people in all professions have been stretching the truth since the first resume came off a typewriter. But that doesn’t make it right.

Today, background screens and reference checks typically reveal discrepancies in about half of job applications (46%), according to ADP, a large HR, payroll, and benefits administration firm. This includes lying about work history, falsifying or exaggerating education, or claiming to have non-existing licenses.

We’ll take this statistic even further. If nearly half of people lie on their resumes or job applications, how many stretch the truth in sales letters, marketing brochures, and sales presentations? However, not every instance results from bad faith. Instead, many business professionals, including financial advisors, claim expertise unwittingly. They’re excited about getting a new client and truly believe they can do the work. But unfortunately their self-perceptions and objective capabilities are out of synch.

Here are some common ways financial-services professionals can exaggerate their way into errors-and-omissions trouble:

  • Sometimes they assume they can quickly amass the expertise after getting a client. But then they find that the learning curve is more difficult and time consuming than they thought.
  • Other times, they overestimate their own capabilities or underestimate the complexity of the client’s situation or service request.
  • In still other cases, fudging takes place because a practice has a culture of “close the sale at any cost.” So advisors come under intense pressure to make unfounded expertise claims even though they wouldn’t under normal circumstances.

Regardless of the cause, claiming to have expertise you don’t have can create customer dissatisfaction and complaints, ultimately eroding your reputation. And as it weakens, it becomes harder to acquire new customers as negative word of mouth scares off interested buyers.

So when can you ethically claim expertise and when shouldn’t you? Here are some guidelines to consider.

Claim expertise . . .

  • When you can execute a project immediately upon closing the sale. If you must begin a course or otherwise climb a learning curve for days or weeks, then don’t claim it.
  • When you’ve done the exact or nearly exact type of work a number of times in the past.
  • When prior clients can attest to the quality of your work and are willing to provide written testimonials or online reviews.
  • When other professionals in your field have begun referring clients to you for that work.

Don’t claim expertise . . .

  • When you have never done the work before.
  • When learning to do it will take days or weeks.
  • When you’re feeling pressure to close the sale at any cost.
  • When the customer is a “center of influence” and you’re not totally certain of your capabilities.
  • When the project sounds intriguing or tempting, but you have doubts about your skills.

Bottom line? In financial services, never claim expertise you don’t have because you may end up getting sued or losing your license. And resist the temptation of making sales through exaggeration. You may increase revenue in the short term, but weaken your reputation (and ultimate success) in the long run.

What’s more, think about the marketing advantage of being one of the few “straight shooters” in your area. When people realize you always deliver on your claims, they will tell their family and friends. As a result, your reputation will soar, as will your closing ratios. That’s because in an era of rampant lies and exaggeration, truth tellers win big!

For more information about ethical sales practices, please visit the National Ethics Association’s Ethics Center at For information on affordable errors-and-omissions insurance for low-risk financial advisors, please visit


Imagine a marketplace where your competitors always tell the truth. OK, you can stop rolling on the floor laughing (“ROFL” in Internet speak). But seriously, what would such a marketplace be like?

For one thing, you wouldn’t have agents claiming their products offer Mercedes benefits at Kia prices. Or saying their State Guarantee Fund covers their products, but not yours. Or promoting higher projected values even though their interest-rate assumptions are overly optimistic.

For another, competitors would stop insulting your license type or business model. (Sure, all captive agents sell junk private-label policies and all fee-only fiduciary advisors are models of ethical propriety.) And you’d never again hear a competitor tag you with the wrong (lower) Best’s Rating or suggest your company is on the brink of insolvency (when it’s flush).

It would also be a marketplace where competitors never impugned your integrity, claiming your clients file frequent E&O insurance lawsuits.

This utopian world sounds great, right? But here’s the problem. Advisors are human, and they’re working in a business that demands results at almost any cost. When imperfect people face pressure to close sales, they invariably stretch the truth. Unfortunately, this hurts everyone around them:

  • It takes money out of the truthful agent’s wallet (or pocketbook) and forces the person to waste time debunking lies.
  • It harms clients because the liars convince them to buy low-quality products that may leave them dangerously under-protected.
  • It hurts insurers because agent lies can embroil carriers in costly regulatory actions and client lawsuits.
  • And its hurts the lying agent because it’s hard to sleep like a baby and wake up with self-respect when you’re a liar.

So if we can’t change the liars, what can we do? Adopt a concept we introduced in a prior article: “The Truth Standard.” Under this approach, advisors will strive to tell clients what they need to hear—even if they don’t want to hear it and even if advisors stand to make less money. Hopefully, as more producers commit themselves to selling straight, consumers will learn to distinguish the truth sellers from the cellar dwellers and reward the former with their business. Eventually, truth will become the gold standard of excellence in our industry, and the bottom feeders will simply fade away.

So how do we promote a new Truth Standard? Here are a couple suggestions:

  • Inform prospects of the legitimate differences between your products and company and those of your competitors. Document your statements with objective, third-party articles, studies, and websites.
  • Adopt a policy of full transparency about your education, business practices, and track record. Ideally publish this information on the Internet, both on your site and on reputation-marketing platforms such as (among others).
  • Don’t hesitate to “call out” a competing agent’s lies, diplomatically, of course. And when you inevitably close the sale, feel free to ROFL.Because he who laughs last, laughs richer—and gets sued a whole lot less.

For more information on reducing your errors-and-omissions insurance liabilities, please visit our E&O Headquarters at (financial professionals only). For more information on ethical selling practices, visit National Ethics Association’s Ethics Center.

Is whistleblowing getting louder in volume? It appears that way, what with Edward Snowden, Bradley Manning, and Julian Assange getting famous (or infamous) for releasing national security documents. They claimed to act in the name of transparency and justice, but others have called their behavior treasonous. However, for every Snowden, there are thousands more corporate or government workers who have witnessed wrongdoing and reported it to the authorities.

According to the Security and Exchange Commission’s (SEC) Office of the Whistleblower, the U.S. government received 3,001 tips in fiscal year 2012. Although it paid out only about $50,000 in cash rewards that year, the program will likely disburse much more over the years to come, as awareness of the program grows and more whistleblowers come forward. But even though whistleblowing is on the rise, it doesn’t appear to have put a dent in the deceptive sales practices that afflict many industries today.

A case in point is the financial advisory business, particularly those firms that provide wealth-and retirement-planning services to senior citizens. For decades, some advisors have taken advantage of seniors by selling them unsuitable or high-priced/low-quality annuities, by churning their accounts and by ensnaring them in Ponzi schemes. And now advisors have begun trolling for prospects using highly deceptive Internet ads, hurting consumers and creating a lot of future errors-and-omissions insurance claims in the process.

Stan Haithcock, an annuity specialist based in Ponte Vedra Beach, Florida, points to prominent Internet banner ads touting annuity investment returns of over 10 and even 15 percent. With 10-year Treasury bonds paying 2 percent or less, Haithcock says it’s highly unlikely that consumers will see double-digit rates anytime soon. Clicking on deceptive ads on his computer every day, Haithcock got angry.

“I think it’s time for agents to start ‘self-policing’ these non-compliant ads and contacting their state insurance organizations, national governing bodies and specific insurance companies,” Haithcock wrote on “We . . . have to protect (our) great products and hold agents accountable when they blatantly cross the line with their advertising practices.”

Now Haithcock is calling for advisors who see such ads to send them to their state regulators. “Demand that they do their jobs by protecting consumers,” he says. “Imagine each state (regulator) getting thousands of screen shots of 10-percent annuity ads with the following four words: ‘Stop these ads now!’ My guess is that they would stop pretty soon.”

So, how do you feel about this? Do you find yourself in competition with advisors who make outrageous claims? Do prospects expect you to match the features, benefits, and costs of phony or deceptive products? Does this impose a financial penalty on your business, making it harder to compete? And how badly does this hurt your customers? Finally, does misrepresentation create a climate of consumer mistrust and eventual anger that lead to more errors-and-omissions insurance claims against advisors?

Bottom line question: Is it time to blow the whistle? Perhaps, but don’t do so without thinking through the consequences. One is potentially attracting regulator scrutiny by stepping forward. Such is our distrust of government institutions these days that many people would rather ignore wrongdoing than risk making themselves known to authorities. But there are equally powerful reasons to report deceptive practices:

  • One is to forestall further regulatory intervention. Wouldn’t you rather clean up your own industry than have government do it for you?
  • Another is to position yourself as an industry leader. Being known as a force for good can only help enhance your reputation. Hopefully, other advisors will view you as someone with integrity and follow your example.
  • Finally, blowing the whistle puts you on the same side as consumers, which builds trust and makes it easier to engage with prospects and convert them into clients.

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