Key Points in This Chapter
- All sales tools must not mislead the reader, viewer, or recipient — truthfulness alone is not sufficient if the overall impression is misleading
- Business cards and stationery must identify the practitioner accurately as to credentials, licensing, and company affiliation
- The title “financial planner” or “financial adviser” requires registration as a Registered Investment Adviser (RIA)
- Advertising brevity creates special disclosure challenges — full product discussion should generally be avoided in ads and direct mail
- Agents must obtain company approval before placing any advertisement
- Advertising gifts of up to $100 per person per calendar year are permitted under FS 626.9541(1)(m) — including gift cards, event tickets, and merchandise
- Personal brochures must identify the practitioner, businesses engaged in, products sold, companies represented, and contact information
- Magazine articles written by a company and appended by the agent should clearly state the article was “made available by” the practitioner
Stationery and Business Cards
A practitioner’s letterhead and business cards must include sufficient information to adequately identify the practitioner and the company being represented, without being misleading. The title used must not state or imply something untrue as to credentials, licensing, or special skills.
For example, a business card reading “Sarah Smith & Associates, Certified Financial Planners” would be improper unless all of Sarah’s associates are CFPs. The term “financial planner” should not be used by a life insurance agent unless that individual is a Registered Investment Adviser (RIA). Using the title “financial consultant,” “financial adviser,” or “investment adviser” without RIA registration is similarly misleading.
If the practitioner is a registered representative, both letterhead and business cards should indicate that, and should provide the name and address of the registered broker/dealer. Failure to identify the broker/dealer can constitute a violation of securities regulations in addition to ethical standards.
Advertising & Direct Mail
The overriding ethical consideration is that the reader not be misled. Language must be truthful and understandable to the target audience. Brevity creates a special challenge: it is often impossible to make full disclosure in an advertisement, so specific product discussion should generally be avoided. Superlatives — “best,” “lowest cost,” “safest” — unless verifiable, must be avoided. Tax-advantage language must include qualifying language inviting the reader to consult their tax adviser.
Florida Advertising Laws — FS 626.9541 and Rule 4-150
Florida law specifically outlaws misleading or false advertising. Three types of advertisements are recognized:
- Institutional: General promotion of insurance as a concept or the company. No specific policy details are required or permitted.
- Invitation to inquire: Creates desire for more information; brief description only; no costs or rates. Must state if subject to exclusions or limitations.
- Invitation to contract: The most specific type; may contain rate information and policy provisions. Must name a licensed Florida agent, include form number, premium, payment period, and any limitations or exclusions.
Prior approval required: Agents must obtain company approval before placing any advertisement. Insurers must remind agents annually that prior approval is required, and must file a Certificate of Compliance with the Department annually.
Other advertising rules: Dividends must be stated as not guaranteed. Endorsements must be genuine, current, and labeled “paid endorsement” if the endorser has a financial interest. Advertisements may not use names deceptively similar to government agencies.
Advertising Gifts
Under FS 626.9541(1)(m), agents may give insureds, prospective insureds, or others advertising gifts — including merchandise, gift cards, event tickets, and other items — with a total value of $100 or less per person per calendar year. Agents may also make charitable contributions on behalf of clients of up to $100 per person per year. Bank-branded prepaid debit cards usable anywhere (e.g., Visa or American Express gift cards) are not permitted, but store-specific gift cards are allowed.
Personal Brochures
Potential problem areas in personal brochures include: claiming designations, expertise, or education not actually possessed; misstating personal or professional accomplishments; and failure to include important information such as what products are used to achieve stated objectives.
At a minimum, a personal brochure must allow the reader to understand:
- The identity of the practitioner
- The businesses engaged in
- The products sold
- The companies represented (with addresses and telephone numbers)
- The practitioner’s own address and telephone number
A brochure that claims to offer “comprehensive financial planning” when the practitioner is licensed only to sell life insurance is both misleading and potentially in violation of securities regulations.
Magazine Articles
Because magazine articles are ultimately intended to generate business, they should be considered advertisements and judged by the same ethical criteria. Information must be factually correct, understandable to the expected audience, and not misleading.
Two ethical concerns arise when an agent appends his or her name to a company-written article:
- The article may imply expertise the practitioner does not possess
- The reader may believe the practitioner wrote the article personally
Both concerns can be resolved by: (1) stating clearly that the article was “made available by” the practitioner rather than written by him or her; and (2) ensuring the practitioner actually possesses the expertise implied by the article’s content.