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Does Do Not Call Apply To Your Clients?

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While many registered reps may feel that the Federal Trade Commission’s Do Not Call Registry doesn’t apply to them, a closer look at the wording reveals there may be some issues–even when calling on existing clients. Enforcement of the Do Not Call Registry begins October 1, 2003.

The central issue some agents are concerned with is the “established business relationship” rule. According to the FTC, a telemarketer or seller may only call on a consumer who has an established business relationship for up to 18 months after the consumer’s last purchase, delivery or payment. If the consumer has signed up with the Do Not Call Registry, any calls made after this 18-month period may be considered a violation and subject to a fine–up to $11,000 per occurrence.

But many advisors feel that these new rules do not effect them. Many have not even considered their implications and have not paid any attention to their detail. Even though a planner “doesn’t do cold calling,” or “only works on referrals,” he or she may still be in violation of the FTC’s Telemarketing Sales Rule.

For example, an agent receives a referral from a client and calls on the referral. Many times, the agent will not know whether or not the person he is calling has discussed this with the person who gave the referral. “If I call, technically, he never inquired directly to me, so if I call and this person is on the Do Not Call list, he may associate me with a telemarketer and file a complaint,” says one registered rep who did not want to be identified.

Putting the advisor at risk may also result in poor service levels to clients. “If it comes down to watching somebody’s securities portfolio tank, and I have to think about whether I’ve spoken to them in 18 months, I’m going to think hard about calling,” he says.

Many other registered representatives, however, feel this is a non-issue. “I’m not worried about it,” says Michael Goss, president of Michael Goss and Associates, Overland Park, Kan. “I’ve got relationships with all my clients, so it’s not going to cause a problem,” he says. Goss adds that if one of his clients does ask him not to call, he won’t call them anymore.

Even if a client hasn’t purchased anything in 18 months, some planners feel they have the right to call on them. “If I sold someone a B share mutual fund, it might have been more than 18 months ago. That’s not an unsolicited call, that’s a relationship call,” says Jeffrey West, a financial advisor with Cohen Financial Group, Framingham, Mass.

“And, what do you mean by purchase?” asks James Jacobs of Jacobs Financial Group, Chesterfield, Va. After hearing about the established relationship rule, Jacobs feels that it doesn’t apply to a number of different elements of his practice. “If they have a life insurance contract, they’re paying premiums on a recurring basis,” he says. “Or, if they’ve got a retirement plan and they’re making contributions, that’s going to be more than once a year,” Jacobs continues.

“If they’re making recurring premium payments, you’ve got an ongoing relationship even if you haven’t spoken with them in 18 months,” he says.

The rule states that if a consumer has a pre-existing relationship with a business of any kind, and they decide they don’t want to continue that relationship, they can ask to be removed from the company’s list. The company is obligated to take them off their list.

“But with something like insurance, where it’s very important for the consumer to maintain contact with their insurance agency, the consumer could ask not to be contacted for other products, but to keep in touch regarding this policy,” says an official at the Federal Trade Commission, Washington, D.C.

Furthermore, she says, if an agent calls someone who is on the registry, it is not a guarantee that they will file a complaint. Complaints go into a database that is accessible by the federal government, state and local law enforcement officials.

“However, one complaint doesn’t launch an investigation,” she says.

The FTC representative adds that all complaints are taken seriously, and the more complaints received, the more likely serious action will be taken.

But the rules were developed to target the biggest violators. “These are not people like insurance agencies, they are people that just don’t stop calling even with a list in place–fraudulent people,” she explains.

If financial advisors have any questions before making any calls, they may call the FTC’s Do Not Call information line at (202) 326-2710. Visit for more information.

This article originally appeared in the July edition of Registered E-report, National Underwriter’s free monthly e-newsletter designed exclusively for registered representatives. Sign up at

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 21, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.