Evaluating Agency Practices

By simply going through our activities as agents, we have managed to identify most, if not all, of the sales tools we use and the prospect interactions in which we use them.  Now that we have identified them, we need to evaluate them.  However, before we can evaluate them, we need reduce the principles we have already discussed up to this point into some usable guidelines.  Those general principles were that all communication must:

Be honest
Convey information fully and fairly, and
Not mislead.

Developing usable guidelines will allow us to compare our tools and practices with those principles.  

 There are three areas to which our discussion of ethics and compliance has repeatedly returned.  They are:

The manner in which we identify our products
The way we identify ourselves, and
The way we present our products' features and benefits

These three areas are the ones that have the greatest risks in terms of ethics and compliance.  In light of that, our guidelines should provide a meaningful standard against which we can evaluate our tools and practices in these areas.  



Ethical Guidelines for Product Identification

Guidelines for the proper identification of your products should include the following:

Always refer to the products by their common names in a way that promotes their being understood.  If it is life insurance, call it a policy, not a plan.

Avoid the use of terms not specific or appropriate to the product; for example, refer to a premium as a premium, not a contribution or deposit.

Since premiums don't really vanish unless the policy is paid-up, avoid the use of the term "vanishing premiums."

If and when identifying the results you seek to achieve for the prospect or client, you must indicate the products used to achieve those results.

Avoid any words that obscure the identity of the product or its functions.

Additionally, we can develop guidelines with respect to how we identify ourselves.



Ethical Guidelines for Self-Identification

Guidelines for how we present and identify ourselves should include the following:

Stationery and business cards must include sufficient information to adequately identify us and our company; they should clearly indicate what we sell.

Company affiliation should be indicated; if you are a representative for one principal company, your status as a representative of that company should be shown.

If you list particular products, the company through which the products are provided should be identified along with its home office.

The titles we use must not state or imply anything untrue as to our credentials, licensing or special skills; do not identify yourself as a "financial planner" or "financial adviser" unless you are a registered investment adviser.

The testimonials and endorsements we use must be true and represent the endorser's current opinion; any financial interest held by the endorser must be disclosed.

The questions we ask the prospect and the forms we use in the sales interview should not imply that we provide services that we don't provide.

Finally, let's develop those necessary guidelines for how we actually present our products.



Ethical Guidelines for Product Presentation

Effective compliance guidelines for how we present our products would include all of the following:

Our presentation must be factually correct and truthful.

We need to make our presentation understandable in light of the target audience's level of understanding; the use of jargon that could be expected to mislead is unethical, even if it is completely true.

We need to be aware of the misleading nature of many superlatives; we can't describe products as "new," "best," "unique," and so forth unless they really are.

Any language that promises tax advantages should also state that only a careful review of the client's situation would determine if they apply and should suggest that the client check with his or her tax adviser.

We need to avoid any specific product discussions unless the product can be completely explained; this means that product discussion on the telephone, in an advertisement or in direct mail pieces should be avoided.

Sales support material that we use, such as graphs, tables and other pieces need to be true and understandable when standing on their own and taken out of context.

The products we present must be suitable for the prospect in light of his or her situation.

In explaining our financial products, we need to avoid analogies to other financial products.

If we make a comparison of unlike products, we need to fully discuss the differences in risk, guarantees, insurance, tax features and in any other material area.

Any comparison of products or companies that we make must be balanced and complete, including both the pros and cons of each product or company; we shouldn't omit any material fact.

We need to make clear in our product illustrations or presentations that any non-guaranteed element may not prove to be as illustrated.

Any statistics that we use need to be substantiated and referenced.

When each of your sales tools and practices have been evaluated in light of these guidelines, it should be obvious where changes are needed.  You may find, however, that you won't be able to do everything immediately.