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 ethics.net (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 EOforLess.com (financial professionals only). For more information on ethical selling practices, visit National Ethics Association’s Ethics Center.