Low-life competitors: Is it time to blow the whistle?Article added by Steven McCarty on July 22, 2013
Ranked: #18 (2,604 pts)
Do competitors who don’t play fair make you angry? Are you ready to do something about it? Then do what Stan Haithcock did.
Is whistleblowing getting louder in volume? It appears that way, what with Edward Snowden, Bradley Manning and Julian Assange getting famous 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.
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 LifeHealthPro.com. “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 most importantly, how does this hurt your customers?
Bottom line question: Is it time to blow the whistle? Perhaps, but don’t do so without thinking through the consequences. One issue to consider: society’s ambivalent attitude toward whistleblowers. On the one hand, we lionize those who go up against the powers that be. On the other, we view them as snitches and tattletales.
In short, we admire whistleblowers, but don’t like them very much. What’s more, even though there are laws making whistleblower retribution illegal, it happens anyway. According to the Ethics Resource Center, 22 percent of employees who reported workplace misconduct in 2011 said they also experienced some form of retaliation, compared to 12 percent in 2007 and 15 percent in 2009. Now, blowing the whistle on a competitor is not as risky as doing so on an employer upon whom your job security depends. Still, speaking out might lead to reprisals from the offending advisor or company — and from others who stand to gain from the competitor's deception.
Another reason some people might prefer to remain silent is that contacting a regulator might attract government scrutiny. 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:
So, where do you stand? Do competitors who don’t play fair make you angry? Are you ready to do something about it? Then do what Stan Haithcock did. Raise your voice and persuade your fellow advisors to follow your lead.
- 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.
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