Mon, August 10, 2009
Always Scrutinize Financial Planner Endorsements Carefully
Last week I received an email that really annoyed me. It was an invitation to a seminar on how to use celebrity endorsements as a marketing tool.
As an investment adviser, I end up on a lot of mailing lists. Having a website means that I get a constant stream of emails from people who make their living selling stuff to financial planners. For the most part I ignore what I receive, but the most exasperating offers are the ones that urge me to market through misrepresentation.
Since my firm is a Registered Investment Adviser, I’m forbidden from using anything that could be considered a “testimonial.” Even if I wanted to use a “celebrity endorsement,” it would be prohibited. But there are different regulation regimes for different advisers; some advisers could (and probably do) use these dubious endorsements. I’ve written elsewhere about the Consumers’ Research Council of America’s Guides, which I’d put in the same questionable category.
An adviser might try to slip past the testimonial rule by using other forms of implied endorsement. A couple of months ago I received a large envelope containing a new book by a well-known wealth manager. I sometimes receive ‘review’ copies of books, so that wasn’t new. What was new was the pitch: a pleasant letter informing me that the book’s publisher had set up a way for me to “co-brand” with the book. For an undisclosed sum, I could write a foreword for a “special printing” of the book that would include my name on the book’s front cover. It would imply that I chum around with a nationally-known financial adviser when, in reality, I don’t even know him. Presumably, one could give these away to clients and keep a copy prominently displayed on the desk.
Then there are the ghost-written book offers I’ve received a few times. There seem to be plenty of people around who’ll write a financial planning book under my name for a price.
The point of all this is to observe that there are plenty of temptations for financial advisers to be misleading or unethical in representing themselves to the public. I believe that most of my colleagues don’t bite on these offers, but it would be naive not to assume that some do.
So if you’re considering hiring an adviser who touts his or her celebrity connection (or new book), don’t be shy about asking some questions about how that nice accomplishment came about: How do you know that guy? Did you write that book by yourself, or did you have help?
Honest financial planners won’t be insulted by your questions, but they may suspect that you’ve been reading their mail.